The Royal Bank of Scotland (RBS) has been stopped by the UK’s Financial Services Authority (FSA) from making repayments on subordinated bonds next month.
The European Commission has previously advised that, with regard to banks that would not have survived without the support of significant public funding, it expected shareholders and bondholders to share some of the resultant losses together with governments (and their taxpayers!)
Given the UK government’s continuing state aid to RBS, the FSA therefore reportedly told RBS that it should not make any payment on the bonds in question.
The Commission has intervened in other cases of payments due on subordinated bonds, while government support is still in existence, most notably in the cases of Bayerische Landesbank, and Anglo Irish Bank, which, it has been reported, were instructed to defer interest on subordinated debt.
A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report9.asp
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