Davis Polk advised The Royal Bank of Scotland Group plc (RBSG), a public limited company incorporated in Scotland, in connection with its debut SEC-registered offering of $2 billion aggregate principal amount of 7.500% perpetual subordinated contingent convertible additional tier 1 capital notes (callable August 10, 2020 and every five years thereafter) and $1.15 billion aggregate principal amount of 8.000% perpetual subordinated contingent convertible additional tier 1 capital notes (callable August 10, 2025 and every five years thereafter), together, the “Notes”.
The Notes, governed by New York law, will qualify as additional tier 1 capital for U.K. regulatory purposes and include a capital adequacy trigger mechanism pursuant to which, if the CET1 capital ratio of the RBSG Group falls below 7.00%, the Notes automatically and mandatorily convert into RBSG shares. Payment of interest is entirely discretionary and subject to cancellation pursuant to the terms of the Notes and regulatory limitations.
RBSG is the holding company of a large global banking and financial services group. Headquartered in Edinburgh, RBSG operates in the United Kingdom, the United States and internationally through its two principal subsidiaries, The Royal Bank of Scotland plc (RBS) and National Westminster Bank Plc (NatWest). Both RBS and NatWest are major U.K. clearing banks. Globally, RBSG has a diversified customer base and provides a wide range of products and services to personal, commercial and large corporate and institutional customers.
The Davis Polk corporate team included partner Jeffrey M. Oakes, counsel Connie I. Milonakis and associates Elisabeth Milan, Taylor Hedrick and Michael D. Arena. Partner John D. Paton, counsel Alon Gurfinkel and associate Nicholas A. Machen provided U.S. tax advice. Partner Jonathan Cooklin and counsel David Wilson provided U.K. tax advice. Counsel Marcie A. Goldstein provided FINRA advice. Counsel Sarah E. Kim provided 1940 Act advice. Members of the Davis Polk team are based in the London and New York offices.
