RBS buys back £2.3bn debt; ‘closes India banking’

Royal Bank of Scotland said on Monday its tender offer to buy back roughly £5.2 billion of bonds to lower its interest payments and meet regulatory requirements had resulted in a take up rate of 43.5% — a total of £2.3 billion.

Meanwhile, news reports suggested RBS has finally decided, as expected, to close down its banking operations in India after failing to find a buyer.

As a result of the £2.3 billion debt buyback, RBS said it will recognise a loss of about £66.1 million in its second quarter 2016 results on a consolidated basis.

But RBS said the bond buyback is expected to result in interest savings of £171.8 million over the life of the debt securities,  which have maturities falling between 2016 and 2025.

The initial loss will be off-set by interest savings over a period of 2-3 years, RBS said.

“The tender offers are part of the on-going transition to a holding company capital and term funding model in line with regulatory requirements …” said RBS.

RBS was rescued in a UK state bailout during the global financial crisis and is still roughly 73% owned by the UK government.

In February, RBS called off the sale of its India banking business and started considering options including the winding down of the business.

The back-office outsourcing business of RBS will continue operations in India.

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.