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The Royal Bank of Scotland Group plc Message Board

  • nothingbutbond nothingbutbond May 3, 2013 10:58 AM Flag

    what does this mean?

    the Board of RBSG has decided to partially neutralise any impact on
    Core Tier 1 capital of coupon and dividend payments in respect of RBSG hybrid capital instruments
    and the RBS N.V. Trust Preferred Securities through an equity issuance of c.£300 million.
    Approximately 80% of this will be raised through the issue of new ordinary shares, which is expected
    to take place during the remainder of 2013. The balance (approximately 20%) will be ascribed to
    equity funding of employee incentive awards through the sale of surplus shares held by the Group’s
    Employee Benefit Trust. RBSG will also undertake several small asset sales

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    • nothingbutbond, you redacted the statement in a confusing manner. The complete statement is;

      "In addition to previous statements with regard to the payment of hybrid coupons and dividends, the Group is also now in a position to resume the payments on the three Trust Preferred Securities of RBS Holdings N.V: RBS Capital Funding Trust V, RBS Capital Funding Trust VI and RBS Capital Funding Trust VII. In the context of recent macroprudential policy discussions, the Board of RBSG has decided to partially neutralise any impact on Core Tier 1 capital of coupon and dividend payments in respect of RBSG hybrid capital instruments
      and the RBS N.V. Trust Preferred Securities through an equity issuance of c.£300 million."

      So we are getting the divi's!

      Sentiment: Hold

    • It means that instead of re-instating the dividend on the RBS.NV Trust Preferred shares, they will issue new common shares and a hybrid called COCOs (which can be involuntarily converted to common shares if the bank gets into trouble again) and the existing G's and I's will be paid off by the end of the year.

      Unless things go wrong......

      Sentiment: Hold

      • 2 Replies to bozotheinvestor
      • The conference call points out that the board wants to resume the dividend on the common shares. To do so, they need to resume the coupon on all the hybrids. GBP 700 million, refers to the total annual coupon of all Tier 1 hybrid instruments (including E, G & I). The above quote refers to providing funding for coupon payments in a manner that does not change today's Tier 1 ratio. In other words, paying the coupon, will reduce capital - they are not generating enough earnings right now. To "neutralize" the effect of future coupon & dividend payments, they mention their plans; which include issuing new securities.

        The only thing that you can assume is they want to pay a dividend on common, but in a way that keeps the regulators happy about their Tier 1 ratio.

        The only thing they said is they actual wrote on p78 of the Q1 IMS 2013 statement regarding E, G & I: "resume the payments on the three Trust Preferred Securities of RBS Holdings N.V: RBS Capital Funding Trust V, RBS Capital Funding Trust VI and RBS Capital Funding Trust VII."

        NOTE: Payments here refers to coupon (aka interest) on the hybrids, this does not imply pay off, an offer to exchange for ECNs or a potential call.

      • the rbs-e, g and i are 2.8 billions dollars in total. 300 millions not enough to retire them. may be just the interests payments.

    • This is the similar way they financed the reinstitution of dividends one year ago for the "may pays". Means zero for the preferreds, but does mildly dilute the common.

 
RBS
11.81+0.07(+0.60%)Oct 24 4:02 PMEDT

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