The Lemon Fool

https://www.hl.co.uk/shares/shares-sear ... -sub-notes

I this security and wondered whether anyone knew why NatWest would convert it into c.8% prefs? Surely the lower rate is better for them?

I appreciate that they might not longer receive a tax deduction for the interest but at current corporation tax rates that is only worth 19% - which is less than they would save!

Rthak

Let me start again - not sure what happened to my English on the post above.

I hold some 11.5 per cent. Undated Subordinated Notes convertible into 200,000,000 8.392 per cent. Non-cumulative Preference Shares of £1 each. The prospectus is here: https://investors.natwestgroup.com/~/me ... 078535.pdf

I wondered whether anyone knew why NatWest have not exercised their conversion option to convert these notes into 8.392% non cumulative preference shares of £1 each? Surely the lower rate is better for them?

I appreciate that they might no longer receive a tax deduction for the interest on the 11.5% bond but at current corporation tax rates that is only worth 19% - which is less than they would save!

Any thoughts greatly appreciated.

Rthak

Perhaps because as of 2026, Prefs will no longer count toward regulatory capital.
Last week, I sold most of my Prefs for that reason.

V8