RESTRUCTURING PLAN AGREED IN PRINCIPLE WITH EUROPEAN COMMISSION
To comply with EC State Aid requirements RBS has agreed, in principle and subject to approval by the College, a series of restructuring measures to be implemented over a four year period. These will supplement the measures in the Strategic Plan already announced by RBS.
• RBS to divest the RBS branch network in England and Wales and the NatWest branches in Scotland and Direct SME customers across the UK.
• RBS to divest RBS Insurance, Global Merchant Services and RBS's interest in RBS Sempra Commodities, all of which occupy leading positions in their markets.
• Divestments will be timed to maximise value and may be effected through initial public offerings, agreed sales or a combination of these. In particular, RBS Insurance is seen as a potential IPO in the later years of RBS's Strategic Plan.
• Should the RBS Core Tier 1 Capital ratio decline to below 5% at any time before 30 November 2014 and the Contingent Capital of up to £8bn is triggered, or should RBS fall short of its existing funded balance sheet reduction targets for 31 December 2013 by 10% or more, HM Treasury has agreed in principle with the EC that RBS will reduce risk-weighted assets ("RWAs") by a further £60bn in excess of plan through further disposals of assets or businesses.
• Behavioural commitments include that RBS will rank no higher than number 5 in the combined all debt league tables globally for 3 years.
• Requirement that RBS shall not pay investors any dividends or coupons on existing hybrid capital instruments (including preference shares and B Shares) or exercise any call rights in respect of such existing securities for a two year period unless there is a legal obligation to do so. The extent and timing of this obligation and the securities which it will impact is subject to further discussion between RBS, HM Treasury and the EC.
• Agreement reached in principle subject to final EC approval by the College.
When read in conjunction with the earlier PR http://www.investors.rbs.com/news/releasedetail.cfm?ReleaseID=416815, it looks like the RBS-F, -H, -L and NatWest (NW-C) will get paid.
Whether Mr. Market will recognize this is anyone's guess. Some people have to have it spelled out for them, I guess.
It's 3:00 a.m. in Seattle. Shooters, anyone? Hey, it's 5:00 in Bangkok ...
Happy that the wait is over,
Interesting, still clear that the fate of securities is going to be negotiated, although OP is probably correct that the framework was probably laid in this announcement a few weeks ago:
(the link above about the different Preference Shares had a comma at the end making it not work)
I see no information anywhere on what may happen to the ABN shares (I have RBS-G).
damn, i added 7k preferreds yesterday! ABN's and L's. Soon enough we will find out which have the legal obligation and how good our board research is!
My majority holdings are G, E, and some L's and the NWestminsters. Everything may get hit initially. You can do an analysis, and let's see, the E's at 5.9 percent pay under $1475 hundred coupon per 1000 shares. Current price about $10, so a 2 year suspension is 10 plus (2 years 1.5), about $13, and a bit of discount moves this to about $16.5. Par 25, but low coupon moves coupon adjusted par to $22-23. So, they are in theory a buy.
I was hoping for a one year suspension given the closing prices yesterday, to add if they suspend. I need em cheaper now. And they just might get real cheap; gotta go right now, but the london exchange needs to be checked for prices today on the EU hybrids.
Might get rocky, but right now you've got the downside targets. Keep a level head -- and toss me a couple shooters!
LONG TERM, this still isn't terrible even for the lower class Pref shares as they weren't wiped out and should in theory be receiving the dividend and/ or called starting 2 years (from today?). Granted, there will be pain between now and then as no one wants to have "dead money" in the meantime. However, with these sitting over halfway below their call value (and that is before the inevitable drop coming in another couple of hours), someone with a long term horizon could still end up doing well. Of course, all this is predicated on RBS successfully maneuvering out of APS and becoming an independent business again.
Thank you Mr. Bliggens. A lot of information to digest, particularly when considering the algorithim used to interlock the dependencies of the various hybrid/preferred shares.
A shooter may help analysis.