Notes 26-30

26 Share Capital

  Alloted, called up
and fully paid		 Authorised
  1 January
2007
£m		 Issued
during the year
£m		 31 December
2007
£m		 31 December
2007
£m		 31 December
2006
£m
Ordinary shares of 25p 788 1,713 2,501 3,018 1,270
Non-voting deferred shares of £0.01 27– 27 323 323
Additional Value Shares of £0.01 – – – 27 27
Non-cumulative preference shares of US$0.01 1 1 2 2 2
Non-cumulative convertible preference shares of US$0.01 – – – – –
Non-cumulative preference shares of €0.01 – – – – –
Non-cumulative convertible preference shares of €0.01 – –– – –
Non-cumulative convertible preference shares of £0.25 – – – 225 225
Non-cumulative convertible preference shares of £0.01 – – – – –
Cumulative preference shares of £1 1 – 1 1 1
Non-cumulative preference shares of £1 – 1 1 300 300
  Allotted, called up and fully paid Authorised
Number of shares – thousands 2007 2006 2005 2007 2006 2005
Ordinary shares of 25p 10,006,215 3,152,844 3,196,544 12,070,492 5,079,375 5,079,375
Non-voting deferred shares of £0.01 2,660,556 2,660,556 2,660,556 32,300,000 32,300,000 32,300,000
Additional Value Shares of £0.01 – – – 2,700,000 2,700,000 2,700,000
Non-cumulative preference shares of US$0.01 308,015 240,000 206,000 419,500 419,500 419,500
Non-cumulative convertible preference shares of US$0.01 1,000 1,000 1,000 3,900 3,900 3,900
Non-cumulative preference shares of €0.01 2,526 2,500 2,500 66,000 66,000 66,000
Non-cumulative convertible preference shares of €0.01 – – – 3,000 3,000 3,000
Non-cumulative convertible preference shares of £0.25 – – – 900,000 900,000 900,000
Non-cumulative convertible preference shares of £0.01 200 200 200 1,000 1,000 1,000
Cumulative preference shares of £1 900 900 900 900 900 900
Non-cumulative preference shares of £1 750 – – 300,000 300,000 300,000
Movement in ordinary shares in issue during the year: Number of shares
– thousands
At 1 January 2007 3,152,844
Bonus issue in May 2007 6,304,299
Shares issued in respect of the acquisition of ABN AMRO 530,621
Other shares issued during the year 19,146
Shares cancelled during the year (695)
At 31 December 2007 10,006,215

Ordinary shares

In May 2007, the company capitalised £1,576 million of its share premium account by way of a bonus issue of two new ordinary shares of 25p each for every one ordinary share held by shareholders at close of business on 4 May 2007.

In addition, the following issues of ordinary shares were made during the year ended 31 December 2007:

(a) 530.6 million ordinary shares issued to former shareholders of ABN AMRO; and

(b) 19.1 million ordinary shares following the exercise of options under the company's share schemes.

Consideration of £77 million was received on the issue of ordinary shares for cash.

During the year ended 31 December 2007, options were granted over 44.8 million ordinary shares under the company's executive and sharesave schemes. At 31 December 2007, options granted under the company's various schemes, exercisable up to 2017 at prices ranging from 260p to 700p per share, were outstanding in respect of 188.7 million ordinary shares.

In addition, options granted under the NatWest executive scheme were outstanding in respect of 1 million ordinary shares exercisable up to 2009 at prices ranging from 228p to 308p per share.

Employee share trusts purchased 10.8 million ordinary shares at a cost of £65.3 million and awarded 19.8 million ordinary shares on receipt of £79 million on the exercise of awards under employee share schemes.

The employee share trusts incurred costs of £0.4 million in purchasing the company's ordinary shares.

Preference shares

In January 2007, the company redeemed the 8 million Series E, the 10 million Series G and the 16 million Series K, non-cumulative preference shares of US$0.01 each at US$25 per share.

In June 2007, the company issued 38 million Series S non-cumulative preference shares of US$0.01 at US$25 each, the net proceeds being US$920 million.

In September 2007, the company issued 64 million Series T non-cumulative preference shares of US$0.01 at US$25 each, the net proceeds being US$1,550 million.

In October 2007, the company issued:

(a) 26,000 Series 3 non-cumulative preference shares of €0.01 at €50,000 each, the net proceeds being €1,287 million;

(b) 750,000 Series 1 non-cumulative preference shares of £1 at £1,000 each, the net proceeds being £742 million; and

(c) 15,000 Series U non-cumulative preference shares of US$0.01 at US$100,000 each, the net proceeds being US$1,485 million.

The costs of issue and discounts allowed on preference shares issued during the year were £64 million.

Under IFRS certain of the Group's preference shares are classified as debt and are included in subordinated liabilities on the balance sheet.

Other securities

In October 2007, the company issued the following subordinated securities in the legal form of debt that are classified as equity under IFRS:

(a) US$1,600 million fixed/floating rate preferred capital securities, the net proceeds being US$1,584 million; and

(b) CAD600 million innovative tier 1 bonds, the net proceeds being CAD594 million.

These securities entitle the holders to interest which may be deferred at the sole discretion of the company. Repayment of the securities is at the sole discretion of the company on giving between 30 and 60 days notice.

Non-cumulative preference shares

Non-cumulative preference shares entitle the holders thereof (subject to the terms of issue) to receive periodic non-cumulative cash dividends at specified fixed rates for each Series payable out of distributable profits of the company.

The non-cumulative preference shares are redeemable at the option of the company, in whole or in part from time to time at the rates detailed below plus dividends otherwise payable for the then current dividend period accrued to the date of redemption.

Class of preference
Number
of shares
in issue		 Interest
rate		 Redemption
date on
or after		 Redemption
price
per share		 Debt or
equity (1)
share Non-cumulative preference
shares of US$0.01		  
Series F 8 million 7.65% 31 March 2007 US$25 Debt
Series H 12 million 7.25% 31 March 2004 US$25 Debt
Series L 34 million 5.75% 30 September 2009 US$25 Debt
Series M 37 million 6.4% 30 September 2009 US$25 Equity
Series N 40 million 6.35% 30 June 2010 US$25 Equity
Series P 22 million 6.25% 31 December 2010 US$25 Equity
Series Q 27 million 6.75% 30 June 2011 US$25 Equity
Series R 26 million 6.125% 30 December 2011 US$25 Equity
Series S 38 million 6.6% 30 June 2012 US$25 Equity
Series T 64 million 7.25% 31 December 2012 US$25 Equity
Series U 15,000 7.64% 29 September 2017 US$100,000 Equity
Non-cumulative convertible preference shares of US$0.01  
Series 1 1 million 9.118% 31 March 2010 US$1,000 Debt
Non-cumulative preference shares of €0.01  
Series 1 1.25 million 5.5% 31 December 2009 €1,000 Equity
Series 2 1.25 million 5.25% 30 June 2010 €1,000 Equity
Series 3 26,000 7.0916% 29 September 2017 €50,000 Equity
Non-cumulative convertible preference shares of £0.01  
Series 1 200,000 7.387% 31 December 2010 £1,000 Debt
Non-cumulative preference shares of £1  
Series 1 750,000 8.162% 5 October 2012 £1,000 Equity

Notes:

(1) Those preference shares where the Group has an obligation to pay dividends are classified as debt; those where distributions are discretionary are classified as equity. The conversion rights attaching to the convertible preference shares may result in the Group delivering a variable number of equity shares to preference shareholders; these convertible preference shares are treated as debt.

In the event that the non-cumulative convertible preference shares are not redeemed on or before the redemption date, the holder may convert the non-cumulative convertible preference shares into ordinary shares in the company.

Under existing arrangements, no redemption or purchase of any non-cumulative preference shares may be made by the company without the prior consent of the UK Financial Services Authority.

On a winding-up or liquidation of the company, the holders of the non-cumulative preference shares will be entitled to receive, out of any surplus assets available for distribution to the company's shareholders (after payment of arrears of dividends on the cumulative preference shares up to the date of repayment) pari passu with the cumulative preference shares and all other shares of the company ranking pari passu with the non-cumulative preference shares as regards participation in the surplus assets of the company, a liquidation distribution per share equal to the applicable redemption price detailed in the table above, together with an amount equal to dividends for the then current dividend period accrued to the date of payment, before any distribution or payment may be made to holders of the ordinary shares as regards participation in the surplus assets of the company.

Except as described above, the holders of the non-cumulative preference shares have no right to participate in the surplus assets of the company.

Holders of the non-cumulative preference shares are not entitled to receive notice of or attend general meetings of the company except if any resolution is proposed for adoption by the shareholders of the company to vary or abrogate any of the rights attaching to the non-cumulative preference shares or proposing the winding-up or liquidation of the company. In any such case, they are entitled to receive notice of and to attend the general meeting of shareholders at which such resolution is to be proposed and are entitled to speak and vote on such resolution (but not on any other resolution). In addition, in the event that, prior to any general meeting of shareholders, the company has failed to pay in full the three most recent quarterly dividend payments due on the non-cumulative dollar preference shares (other than Series U), the two most recent semi-annual dividend payments due on the non-cumulative convertible dollar preference shares and the most recent dividend payments due on the non-cumulative euro preference shares, the non-cumulative sterling preference shares, the Series U non-cumulative dollar preference shares and the non-cumulative convertible sterling preference shares, the holders shall be entitled to receive notice of, attend, speak and vote at such meeting on all matters together with the holders of the ordinary shares, and in these circumstances only, the rights of the holders of the non-cumulative preference shares so to vote shall continue until the company shall have resumed the payment in full of the dividends in arrears.

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