RBS to offer up £15bn worth of debt, reports claim

26 March 2010

The Royal Bank of Scotland (RBS) is to offer bondholders to buy back or replace up to £15 billion worth of debt with new loans.

According to the bank, the move is part of a “liability management exercise” to boost its balance sheet after relying on government bailouts worth more than £45 billion to help survive the global financial crisis.

The move is expected to boost the value of the firm’s assets by £1 billion, increasing the figure to £1.5 billion, the Daily Telegraph reported.

RBS’s capital core ratio could go up to 11.3 per cent following the exercise.

Ian Gordon, an analyst at Exane BNP Paribas in London, told Bloomberg: “An offer to a large range of subordinated debt holders to either redeem this debt below par or swap it into senior debt allows RBS to crystallize losses.

“Whatever RBS does, core capital would be strengthened.”

RBS is currently 84 per cent owned by the government after its reliance on state bailouts.

By Jim Ottewill

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