FSA stops RBS calling subordinated debt
The gap between banks able to pay coupons on hybrid tier one and to call subordinated debt and those unable to do so widened further last Friday (September 4) when Royal Bank of Scotland said it would not be calling four subordinated issues at the instruction of the UK’s Financial Services Authority, following discussions with the European Commission.
The bonds in question are two upper tier two and two lower tier two securities that market participants expected to be called in October. They fell heavily, by 15-20 points on the news.
It is the first time that an institution has been prevented from calling lower tier two
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