TIDMRBS TIDM61ZU TIDMNATN
RNS Number : 1460X
Royal Bank of Scotland Group PLC
21 November 2017
The Royal Bank of Scotland Group plc
21 November 2017
The Royal Bank of Scotland Group plc - update on ring-fencing
plans
Further to the announcements of 30 September 2016 and 3 January
2017 relating to its future ring-fencing strategy, The Royal Bank
of Scotland Group plc (together with its subsidiaries, "RBS") is
today providing further details of its proposed ring-fencing
transfer scheme and other restructuring steps relating to
ring-fencing.
Introduction
The UK ring-fencing legislation requiring the separation of
essential banking services from investment banking services will
take effect from 1 January 2019. In order to comply with the UK
ring-fencing requirements, RBS needs to undertake a significant
reorganisation of its current legal entity structure and business
model.
As also announced on 30 September 2016, one of the three
principal corporate steps in that reorganisation is the transfer of
certain personal and business banking businesses and commercial
banking businesses of The Royal Bank of Scotland plc ("RBS plc") to
Adam & Company PLC ("Adam") and National Westminster Bank Plc
("NatWest"). In addition, NatWest is to become issuer under the
covered bond programme originally established by RBS plc (the
"Covered Bond Programme").
The Scheme
RBS intends to effect the above transfer by using a legal scheme
called a Ring-Fencing Transfer Scheme (the "Scheme") under Part VII
of the Financial Services and Markets Act 2000 ("FSMA").
Accordingly, a petition was presented (the "Petition") to the
Court of Session in Scotland (the "Court") on 17 November 2017 for
an order under Part VII of FSMA approving the Scheme for the
transfer to Adam and NatWest of the business referred to above.
A first hearing was held at the Court on 21 November 2017 and a
hearing for the approval of the Scheme is expected to be held on 22
March 2018. If the Scheme is approved at that hearing, the
effective date of the Scheme will be 30 April 2018 or any later
date which RBS plc, Adam and NatWest may agree with the Prudential
Regulation Authority and the Financial Conduct Authority.
Implementation of the Scheme is subject, amongst other matters,
to Court and regulatory approvals.
Unless the context requires otherwise, capitalised terms used
below are defined in the Scheme.
Other events
At the same time as the Scheme becomes effective, Adam will be
renamed "The Royal Bank of Scotland plc" and RBS plc will be
renamed "NatWest Markets Plc".
Scottish Banknote issuance
RBS plc is currently authorised to issue banknotes in Scotland,
in the name of The Royal Bank of Scotland plc. Subject to
Parliament approving secondary legislation authorising the transfer
of the right to issue Scottish banknotes, it is intended that on
the date the Scheme becomes effective, RBS plc's authority as
issuer of banknotes in Scotland will be transferred to Adam. From
that date, Adam will supersede RBS plc in respect of banknotes in
circulation and issue banknotes in Scotland under its new name.
Additional restructuring steps
During the second half of 2018, it is proposed that NatWest
Holdings Limited, as parent of the ring-fenced sub-group (which
includes NatWest and Adam), will be transferred from RBS plc to The
Royal Bank of Scotland Group plc. This will occur through a
dividend in specie of RBS plc's shares in NatWest Holdings Limited,
following a reduction of capital in RBS plc (subject to Court and
regulatory approvals as applicable). RBS plc will make a separate
application to the Court for the reduction of capital.
Debt investors
RBS expects that The Royal Bank of Scotland Group plc will
continue to be primarily responsible for issuing external
regulatory capital and MREL (minimum requirements for own funds and
eligible liabilities) compliant instruments. Save as set out in
this announcement with respect to the Covered Bonds and the Covered
Bond Programme, the Scheme will not effect any change of issuer
under any outstanding, externally-issued debt instruments.
Covered Bonds
RBS plc is currently the issuer under the Covered Bond Programme
and carries out certain additional roles under the Covered Bond
Programme. RBS Covered Bonds Limited Liability Partnership (the
"LLP") guarantees payments of interest and principal of the covered
bonds issued under the Covered Bond Programme (the "Covered
Bonds").
It is proposed that, under the Scheme, NatWest will become
issuer under the Covered Bond Programme, including in respect of
any Covered Bonds issued that remain outstanding on the date on
which the Scheme becomes effective. NatWest will also assume the
additional roles currently carried out by RBS plc under the Covered
Bond Programme (other than the roles of RBS plc as arranger and
dealer in relation to the Covered Bond Programme, or its role as
holder of any Covered Bonds). Accordingly, the following principal
amendments to the Covered Bonds and the related Covered Bond
Programme Transaction Documents are proposed to be made by the
Scheme:
- Transferring Covered Bond Roles: Where the Covered Bonds or
any Covered Bond Programme Transaction Document refer to RBS plc as
issuer of the Covered Bonds or as the entity carrying out any other
Transferring Covered Bond Roles, those references shall be
construed as a reference to NatWest. The other Transferring Covered
Bond Roles are cash manager to the LLP; seller and servicer of
mortgage loans held by the LLP; lender to the LLP under the
intercompany loan agreement; interest rate swap provider and
covered bond swap provider to the LLP; and designated member of the
LLP (see Schedule 4 of the Scheme Document).
- NatWest as sole seller and servicer: Currently, either RBS plc
or NatWest may act as seller of mortgage loans to the LLP and as
servicer of those mortgage loans. The Covered Bond Programme
Transaction Documents will be amended, so that only NatWest carries
out these roles (see Schedule 4 of the Scheme Document).
If the Scheme is ultimately approved by the Court, certain
ancillary changes are expected to be made outside of the Scheme to
the Covered Bond Programme, the LLP and its members. The principal
changes are the resignation of RBS plc as a member of the LLP; the
LLP being renamed as NatWest Covered Bonds LLP; the transfer by RBS
plc to NatWest of its shares in one of the members of the LLP, RBS
Covered Bonds (LM) Limited; and that member of the LLP being
renamed as NatWest Covered Bonds (LM) Limited.
If you are in any doubt as to whether there is any tax or other
impact on you as a result of the Scheme, please discuss such
matters with your advisers or contact our Investor Relations team
(central point of contact) indicated on our Fixed Income Investor
website at www.investors.rbs.com . Otherwise, there is no
requirement for investors in Covered Bonds to take any action.
Further information on the Scheme
Copies of the Petition, the full terms of the Scheme, a summary
of its principal terms, the report of the skilled person relating
to the Scheme and a summary of that report are available, free of
charge, at www.rbs.com/ring-fencing or on request from RBS plc at
36 St Andrew Square, Edinburgh, EH2 2YB. A copy of any
supplementary report of the skilled person will, if provided, also
be so available. All of those documents will be available until the
date of the Court hearing to approve the Scheme.
General information on RBS's ring-fencing plans is also
available at www.rbs.com/ring-fencing which contains links to
previous RBS announcements on its implementation of ring-fencing
and to the FCA and PRA websites.
If you would like to know more or have any questions, please
visit our website at www.rbs.com/ring-fencing .
Making your views known
Any person who considers that they would be adversely affected
by the carrying out of the Scheme has two alternative ways of
making sure the Court considers their views.
a) Lodging formal objections with the Court
They have the right to lodge formal written objections (known as
"Answers") with the Court. If any person wishes to lodge Answers,
they should seek independent legal advice. Answers are a formal
Court document which must comply with the rules of the Court and
are normally prepared by Scottish legal counsel. Answers must be
lodged with the Court at Parliament House, Parliament Square,
Edinburgh, EH1 1RQ within 42 days of the publication of the last of
the notices relating to the Scheme, which is expected to be on or
around 27 November 2017. The deadline for lodging Answers is 8
January 2018. In addition, Answers must be accompanied by a fee to
the Court.
b) In writing or in person
The Court will also consider any other informal objections to
the Scheme which are made in writing or in person at the hearing to
consider approving the Scheme. If any person wishes to object in
writing or in person at that hearing, they need to send a written
statement of their views to all of the following:
-- the Court (either by post or by hand) at the above address;
-- RBS plc (either by post or by hand) at 36 St Andrew Square, Edinburgh, EH2 2YB; and
-- the Prudential Regulation Authority either:
o by post to The Royal Bank of Scotland, Prudential Regulation
Authority, Bank of England, Threadneedle Street, London, EC2R 8AH;
or
o by submitting it online at
http://www.bankofengland.co.uk/pra/Pages/authorisations/structuralreform/representations.aspx
If any person wishes to object in this way, they need to do this
by 5 p.m. on 23 February 2018, in order to ensure that the Court
will consider their objection at the hearing to consider approving
the Scheme. No fee is payable to the Court for objecting in this
way.
The Court may also consider any objections made in writing or in
person at the hearing to consider approving the Scheme, although it
may not do so if the process for objecting described above has not
been followed.
For Further Information Contact:
RBS Investor Relations
Matt Waymark
Head of Investor Relations
+44 (0) 20 7672 1758
Scott Forrest
Head of Treasury Debt Capital Markets
+44 (0) 20 7678 5313
RBS Media Relations
+44 (0) 13 1523 4205
Forward Looking Statements
This announcement contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
including those related to RBS and its subsidiaries' regulatory
capital position, and requirements, financial position, future
pension funding requirements, on-going litigation and regulatory
investigations, profitability, risk-weighted assets, impairment
losses and credit exposures under certain specified scenarios. In
addition, forward-looking statements may include, without
limitation, statements typically containing words such as
"intends", "expects", "anticipates", "targets", "plans",
"believes", "risk", "estimates" and words of similar import. These
statements concern or may affect future matters, such as RBS's
future economic results, business and capital plans and current
strategies. Forward-looking statements are subject to a number of
risks and uncertainties that might cause actual results and
performance to differ materially from any expected future results
or performance expressed or implied by the forward-looking
statements. Factors that could cause or contribute to differences
in current expectations include, but are not limited to,
legislative, fiscal and regulatory developments, accounting
standards, competitive conditions, technological developments,
exchange rate fluctuations and general economic conditions. These
and other factors, risks and uncertainties that may impact any
forward-looking statement or RBS's actual results are discussed in
RBS's UK annual report and accounts and interim reports and
materials filed with, or furnished to, the US Securities and
Exchange Commission, including, but not limited to, RBS's Reports
on Form 6-K and most recent Annual Report on Form 20-F. The
forward-looking statements contained in this announcement speak
only as of the date of this announcement and RBS does not assume or
undertake any obligation or responsibility to update any of the
forward-looking statements contained in this announcement, whether
as a result of new information, future events or otherwise, except
to the extent legally required.
Legal Entity Identifier
The Royal Bank of Scotland 2138005O9XJIJN4JPN90
Group plc
The Royal Bank of Scotland RR3QWICWWIPCS8A4S074
plc
National Westminster 213800IBT39XQ9C4CP71
Bank Plc
Adam & Company PLC 213800GC5AG3WC3FEM84
This information is provided by RNS
The company news service from the London Stock Exchange
END
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