28. Subordinated liabilities
| Group | Company | |||
| 2006 £m |
2005 £m |
2006 £m |
2005 £m |
|
| Designated as at fair value through profit or loss | 124 | 150 | — | — |
| Amortised cost | 27,530 | 28,124 | 8,194 | 9,242 |
| 27,654 | 28,274 | 8,194 | 9,242 | |
| Group | Company | |||
| 2006 £m |
2005 £m |
2006 £m |
2005 £m |
|
| Dated loan capital | 13,772 | 13,001 | 5,531 | 5,635 |
| Undated loan capital | 9,555 | 10,132 | 834 | 1,244 |
| Preference shares | 2,277 | 2,840 | 1,829 | 2,363 |
| Trust preferred securities | 2,050 | 2,301 | — | — |
| 27,654 | 28,274 | 8,194 | 9,242 | |
Certain preference shares are classified as liabilities; these securities remain subject to the capital maintenance rules of the Companies Act 1985.
The following tables analyse the remaining maturity of subordinated liabilities by (1) the final redemption date; and (2) the next callable date.
| Group | |||||||
| 2006 – final redemption | 2007 £m |
2008 £m |
2009-2011 £m |
2012-2016 £m |
Thereafter £m |
Perpetual £m |
Total £m |
| Sterling | 352 | — | — | 772 | 391 | 5,960 | 7,475 |
| US$ | 112 | 87 | 1,123 | 3,938 | 229 | 4,893 | 10,382 |
| Euro | 187 | 173 | 955 | 2,656 | 1,578 | 2,381 | 7,930 |
| Other | 24 | — | — | 984 | 445 | 414 | 1,867 |
| Total | 675 | 260 | 2,078 | 8,350 | 2,643 | 13,648 | 27,654 |
| Group | ||||||||
| 2006 – call date |
Currently £m |
2007 £m |
2008 £m |
2009-2011 £m |
2012-2016 £m |
Thereafter £m |
Perpetual £m |
Total £m |
| Sterling | — | 502 | — | 1,103 | 2,161 | 3,543 | 166 | 7,475 |
| US$ | 1,843 | 1,200 | 469 | 3,835 | 1,859 | 1,176 | — | 10,382 |
| Euro | — | 274 | 948 | 1,634 | 4,473 | 565 | 36 | 7,930 |
| Other | — | 24 | — | 701 | 1,043 | 99 | — | 1,867 |
| Total | 1,843 | 2,000 | 1,417 | 7,273 | 9,536 | 5,383 | 202 | 27,654 |
| Group | |||||||
| 2005 - final redemption | 2006 £m |
2007 £m |
2008-2010 £m |
2011-2015 £m |
Thereafter £m |
Perpetual £m |
Total £m |
| Sterling | 51 | 150 | — | 1,123 | 415 | 6,083 | 7,822 |
| US$ | 412 | — | 811 | 3,537 | 555 | 6,552 | 11,867 |
| Euro | 129 | — | 836 | 3,003 | 1,164 | 2,539 | 7,671 |
| Other | 10 | — | 356 | 425 | — | 123 | 914 |
| Total | 602 | 150 | 2,003 | 8,088 | 2,134 | 15,297 | 28,274 |
| Group | ||||||||
| 2005 - call date |
Currently £m |
2006 £m |
2007 £m |
2008-2010 £m |
2011-2015 £m |
Thereafter £m |
Perpetual £m |
Total £m |
| Sterling | 139 | 331 | 324 | 761 | 1,188 | 4,913 | 166 | 7,822 |
| US$ | 2,386 | 878 | 622 | 2,637 | 3,079 | 2,265 | — | 11,867 |
| Euro | — | 148 | — | 1,997 | 2,659 | 2,830 | 37 | 7,671 |
| Other | — | 10 | — | 781 | — | 123 | — | 914 |
| Total | 2,525 | 1,367 | 946 | 6,176 | 6,926 | 10,131 | 203 | 28,274 |
| Company | |||||||
| 2006 – final redemption | 2007 £m |
2008 £m |
2009-2011 £m |
2012-2016 £m |
Thereafter £m |
Perpetual £m |
Total £m |
| Sterling | — | — | — | — | 399 | 199 | 598 |
| US$ | 63 | — | 355 | 1,227 | 2,301 | 2,440 | 6,386 |
| Euro | 41 | — | — | — | 1,169 | — | 1,210 |
| Total | 104 | — | 355 | 1,227 | 3,869 | 2,639 | 8,194 |
| Company | ||||||||
| 2006 – call date |
Currently £m |
2007 £m |
2008 £m |
2009-2011 £m |
2012-2016 £m |
Thereafter £m |
Perpetual £m |
Total £m |
| Sterling | — | — | — | 198 | — | 399 | 1 | 598 |
| US$ | 762 | 203 | 380 | 1,287 | 2,643 | 1,111 | — | 6,386 |
| Euro | — | 41 | — | — | 1,169 | — | — | 1,210 |
| Total | 762 | 244 | 380 | 1,485 | 3,812 | 1,510 | 1 | 8,194 |
| Company | |||||||
| 2005 - final redemption | 2006 £m |
2007 £m |
2008-2010 £m |
2011-2015 £m |
Thereafter £m |
Perpetual £m |
Total £m |
| Sterling | — | — | — | — | — | 198 | 198 |
| US$ | 33 | — | 232 | 1,572 | 2,269 | 3,744 | 7,850 |
| Euro | — | — | — | — | 1,194 | — | 1,194 |
| Total | 33 | — | 232 | 1,572 | 3,463 | 3,942 | 9,242 |
| Company | ||||||||
| 2005 - call date |
Currently £m |
2006 £m |
2007 £m |
2008-2010 £m |
2011-2015 £m |
Thereafter £m |
Perpetual £m |
Total £m |
| Sterling | — | — | — | 197 | — | — | 1 | 198 |
| US$ | 1,079 | 428 | 159 | 1,297 | 1,572 | 3,315 | — | 7,850 |
| Euro | — | — | — | — | — | 1,194 | — | 1,194 |
| Total | 1,079 | 428 | 159 | 1,494 | 1,572 | 4,509 | 1 | 9,242 |
Dated loan capital
| 2006 £m |
2005 £m |
|
| The company | ||
| US$400 million 6.4% subordinated notes 2009 (1) | 206 | 236 |
| US$300 million 6.375% subordinated notes 2011 (1) | 163 | 190 |
| US$750 million 5% subordinated notes 2013 (1) | 375 | 433 |
| US$750 million 5% subordinated notes 2014 (1) | 373 | 432 |
| US$250 million 5% subordinated notes 2014 (1) | 125 | 145 |
| US$675 million 5.05% subordinated notes 2015 (1) | 351 | 406 |
| US$350 million 4.7% subordinated notes 2018 (1) | 169 | 197 |
| 1,762* | 2,039* | |
| The Royal Bank of Scotland plc | ||
| £150 million 8.375% subordinated notes 2007 | 162 | 165 |
| €255 million 5.25% subordinated notes 2008 | 177 | 187 |
| €300 million 4.875% subordinated notes 2009 | 212 | 224 |
| US$350 million floating rate subordinated notes 2012 (callable July 2007) | 184 | 205 |
| US$500 million floating rate subordinated notes 2012 (callable July 2007) | 254 | 293 |
| €130 million floating rate subordinated notes 2012 (callable July 2007) | 88 | 90 |
| €1,000 million floating rate subordinated notes 2013 (callable October 2008) | 677 | 690 |
| US$50 million floating rate subordinated notes 2013 | 25 | 29 |
| €1,000 million 6% subordinated notes 2013 | 745 | 792 |
| €500 million 6% subordinated notes 2013 | 342 | 363 |
| £150 million 10.5% subordinated bonds 2013 (2) | 168 | 176 |
| US$1,250 million floating rate subordinated notes 2014 (callable July 2009) | 643 | 732 |
| AUD590 million 6% subordinated notes 2014 (callable October 2009) | 235 | 254 |
| AUD410 million floating rate subordinated notes 2014 (callable October 2009) | 167 | 176 |
| CAD700 million 4.25% subordinated notes 2015 (callable March 2010) | 307 | 348 |
| £250 million 9.625% subordinated bonds 2015 | 287 | 299 |
| US$750 million floating rate subordinated notes 2015 (callable September 2010) | 381 | 435 |
| €750 million floating rate subordinated notes 2015 | 531 | 574 |
| CHF400 million 2.375% subordinated notes 2015 | 160 | 174 |
| CHF100 million 2.375% subordinated notes 2015 | 43 | 44 |
| CHF200 million 2.375% subordinated notes 2015 (issued April 2006) | 81 | — |
| US$500 million floating rate subordinated notes 2016 (callable October 2011) | 257 | 293 |
| US$1,500 million floating rate subordinated notes 2016 (issued April 2006; callable April 2011) | 773 | — |
| €500 million 4.5% subordinated 2016 (callable January 2011) | 350 | 372 |
| CHF200 million 2.75% subordinated notes 2017 (issued December 2006; callable December 2012) | 84 | — |
| €100 million floating rate subordinated notes 2017 | 67 | 69 |
| €500 million floating rate subordinated notes 2017 (issued June 2006; callable June 2012) | 337 | — |
| €750 million 4.35% subordinated notes 2017 (issued October 2006; callable October 2017) | 502 | — |
| AUD450 million 6.5% subordinated notes 2017 (issued November 2006; callable February 2012) | 184 | — |
| AUD450 million floating rate subordinated notes 2017 (issued November 2006; callable February 2012) | 182 | — |
| US$125.6 million floating rate subordinated notes 2020 | 65 | 74 |
| €1,000 million 4.625% subordinated notes 2021 (callable September 2016) | 687 | 747 |
| National Westminster Bank Plc | ||
| US$1,000 million 7.375% rate subordinated notes 2009 | 516 | 589 |
| €600 million 6% subordinated notes 2010 | 440 | 469 |
| £300 million 8.125% step-up subordinated notes 2011 (redeemed December 2006) | — | 309 |
| €500 million 5.125% subordinated notes 2011 | 343 | 349 |
| £300 million 7.875% subordinated notes 2015 | 350 | 373 |
| £300 million 6.5% subordinated notes 2021 | 332 | 353 |
| Charter One Financial, Inc | ||
| US$400 million 6.375% subordinated notes 2012 | 218 | 252 |
| Greenwich Capital Holdings, Inc | ||
| US$105 million subordinated loan capital 2006 floating rate notes (redeemed October 2006) | — | 61 |
| US$500 million subordinated loan capital 2010 floating rate notes (callable December 2007) | 256 | 291 |
| US$170 million subordinated loan capital floating rate notes 2008 (issued October 2006) | 87 | — |
| First Active Plc | ||
| US$35 million 7.24% subordinated bonds 2012 (callable December 2007) | 22 | 22 |
| £60 million 6.375% subordinated bonds 2018 (callable April 2013) | 65 | 65 |
| Other minority interest subordinated issues | 24 | 24 |
| 13,772 | 13,001 |
* In addition the company has issued 0.5 million subordinated loan notes of €1,000 each, 1.95 million subordinated loan notes of US$1,000 each and 0.4 million subordinated loan notes of £1,000 each. These loan notes are included in the company balance sheet as loan capital but are reclassified as minority interest Trust Preferred Securities on consolidation (see Note 29).
Notes:
(1) On-lent to The Royal Bank of Scotland plc on a subordinated basis.
(2) Unconditionally guaranteed by the company.
(3) In the event of certain changes in tax laws, dated loan capital issues may be redeemed in whole, but not in part, at the option of the issuer, at the principal amount thereof plus accrued interest, subject to prior regulatory approval.
(4) Except as stated above, claims in respect of the Group’s dated loan capital are subordinated to the claims of other creditors. None of the Group’s dated loan capital is secured.
(5) Interest on all floating rate subordinated notes is calculated by reference to market rates.
Undated loan capital
| 2006 £m |
2005 £m |
|
| The company | ||
| US$200 million 8.5% exchangeable capital securities, Series A (redeemed January 2006) (1) | — | 117 |
| US$50 million undated 7.993% capital securities (redeemed January 2006) (1) | — | 30 |
| US$35 million undated 7.755% capital securities (redeemed January 2006) (1) | — | 20 |
| US$350 million undated floating rate primary capital notes (callable on any interest payment date) (1) | 178 | 203 |
| US$200 million undated 7.375% reset capital securities (redeemed April 2006) (1) | — | 119 |
| US$75 million floating rate perpetual capital securities (callable September 2007) (1) | 38 | 44 |
| US$1,200 million 7.648% perpetual regulatory tier one securities (callable September 2031) (1,2) | 618 | 711 |
| 834 | 1,244 | |
| The Royal Bank of Scotland plc | ||
| £150 million 5.625% undated subordinated notes (callable June 2032) | 144 | 149 |
| £175 million 7.375% undated subordinated notes (callable August 2010) | 183 | 191 |
| €152 million 5.875% undated subordinated notes (callable October 2008) | 105 | 111 |
| £350 million 6.25% undated subordinated notes (callable December 2012) | 350 | 366 |
| £500 million 6% undated subordinated notes (callable September 2014) | 512 | 540 |
| €500 million 5.125% undated subordinated notes (callable July 2014) | 350 | 378 |
| €1,000 million floating rate undated subordinated notes (callable July 2014) | 675 | 688 |
| £500 million 5.125% undated subordinated notes (callable March 2016) | 493 | 516 |
| £200 million 5.625% subordinated upper tier 2 notes (callable September 2026) | 210 | 213 |
| £125 million 9.25% undated subordinated step-up notes (redeemed April 2006) | — | 136 |
| £600 million 5.5% undated subordinated notes (callable December 2019) | 594 | 628 |
| £500 million 6.2% undated subordinated notes (callable March 2022) | 546 | 570 |
| £200 million 9.5% undated subordinated bonds (callable August 2018) (3) | 229 | 243 |
| £400 million 5.625% subordinated upper tier 2 notes (callable September 2026) | 397 | 404 |
| £300 million 5.625% undated subordinated notes (callable September 2026) | 326 | 359 |
| £350 million 5.625% undated subordinated notes (callable June 2032) | 362 | 358 |
| £150 million undated subordinated floating rate step-up notes (callable March 2007) | 150 | 150 |
| £400 million 5% undated subordinated notes (issued March 2006; callable March 2011) | 395 | — |
| JPY25 billion 2.605% undated subordinates notes (callable November 2034) | 99 | 123 |
| CAD700 million 5.37% fixed rate undated subordinated notes (issued May 2006; callable May 2016) | 317 | — |
| National Westminster Bank Plc | ||
| US$500 million primary capital floating rate notes, Series A (callable on any interest payment date) | 256 | 291 |
| US$500 million primary capital floating rate notes, Series B (callable on any interest payment date) | 267 | 295 |
| US$500 million primary capital floating rate notes, Series C (callable on any interest payment date) | 254 | 294 |
| US$500 million 7.875% exchangeable capital securities (redeemed January 2006) | — | 295 |
| US$500 million 7.75% reset subordinated notes (callable October 2007) | 262 | 305 |
| €400 million 6.625% fixed/floating rate undated subordinated notes (callable October 2009) | 280 | 299 |
| €100 million floating rate undated step-up notes (callable October 2009) | 68 | 70 |
| £325 million 7.625% undated subordinated step-up notes (callable January 2010) | 359 | 372 |
| £200 million 7.125% undated subordinated step-up notes (callable October 2022) | 205 | 205 |
| £200 million 11.5% undated subordinated notes (callable December 2022) (4) | 272 | 277 |
| First Active plc | ||
| £20 million 11.75% perpetual tier two capital | 23 | 23 |
| £38 million 11.375% perpetual tier two capital | 36 | 37 |
| £1.3 million floating rate perpetual tier two capital | 2 | 2 |
| 9,555 | 10,132 |
Notes:
(1) On-lent to The Royal Bank of Scotland plc on a subordinated basis.
(2) The company can satisfy interest payment obligations by issuing ordinary shares to appointed Trustees sufficient to enable them, on selling these shares, to settle the interest payment.
(3) Guaranteed by the company.
(4) Exchangeable at the option of the issuer into 200 million 8.392% (gross) non-cumulative preference shares of £1 each of National Westminster Bank Plc at any time.
(5) Except as stated above, claims in respect of the Group’s undated loan capital are subordinated to the claims of other creditors. None of the Group’s undated loan capital is secured.
(6) In the event of certain changes in tax laws, undated loan capital issues may be redeemed in whole, but not in part, at the option of the Group, at the principal amount thereof plus accrued interest, subject to prior regulatory approval.
(7) Interest on all floating rate subordinated notes is calculated by reference to market rates.
Preference shares
| 2006 £m |
2005 £m |
|
| The company | ||
| Non-cumulative preference shares of US$0.01 (1) | ||
| Series D US$175 million 8.2125% (redeemed March 2006) | — | 103 |
| Series E US$200 million 8.1% (2) | 102 | 116 |
| Series F US$200 million 7.65% (redeemable March 2007) | 102 | 116 |
| Series G US$250 million 7.4% (2) | 126 | 146 |
| Series H US$300 million 7.25% (redeemable at option of issuer) | 153 | 175 |
| Series I US$300 million 8% (redeemed March 2006) | — | 175 |
| Series K US$400 million 7.875% (2) | 203 | 235 |
| Series L US$850 million 5.75% (redeemable September 2009) | 429 | 492 |
| Non-cumulative convertible preference shares of US$0.01 (1) | ||
| Series 1 US$1,000 million 9.118% (redeemable March 2010) | 515 | 607 |
| Non-cumulative convertible preference shares of £0.01 (1) | ||
| Series 1 £200 million 7.387% (redeemable December 2010) | 200 | 197 |
| Cumulative preference shares of £1 | ||
| £0.5 million 11% (non-redeemable) | 1 | 1 |
| £0.4 million 5.5% (non-redeemable) | — | — |
| 1,831 | 2,363 | |
| National Westminster Bank Plc | ||
| Non-cumulative preference shares of £1 | ||
| Series A £140 million 9% (non-redeemable) | 142 | 140 |
| Non-cumulative preference shares of US$25 | ||
| Series B US$250 million 7.8752% (3) | 141 | 156 |
| Series C US$300 million 7.7628% (4) | 163 | 181 |
| 2,277 | 2,840 |
Notes:
(1) Further details of the contractual terms of the preference shares are given in Note 30 on page 175.
(2) Redeemed in January 2007.
(3) Series B preference shares each carry a gross dividend of 8.75% inclusive of associated tax credit. These preference shares were redeemed in January 2007.
(4) Series C preference shares each carry a gross dividend of 8.625% inclusive of associated tax credit. Redeemable at the option of the issuer at a premium of US$0.30 reducing to nil if the date of redemption falls after 8 April 2007.
Trust preferred securities (1)
| 2006 £m |
2005 £m |
|
| €1,250 million 6.467% (redeemable June 2012) | 918 | 993 |
| US$750 million 6.8% (redeemable March 2008) | 382 | 436 |
| US$850 million 4.709% (redeemable July 2013) | 409 | 494 |
| US$650 million 6.425% (redeemable January 2034) | 341 | 378 |
| 2,050 | 2,301 |
Note:
(1) The trust preferred securities have no maturity date and are not redeemable at the option of the holders at any time. These securities may with the consent of the UK Financial Services Authority be redeemed, by the issuer on the dates specified above or on any interest payment date thereafter. They may also be redeemed in whole, but not in part, upon the occurrence of certain tax and regulatory events. These securities are included in the company balance sheet as dated loan capital.
© 2007