Reuters: Bankruptcy News: UPDATE 1-Santander UK boosts core tier 1 via debt buyback

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UPDATE 1-Santander UK boosts core tier 1 via debt buyback Jul 13th 2012, 14:38 Fri Jul 13, 2012 10:38am EDT (Adds detail on bonds purchased) By Aimee Donnellan LONDON, July 13 (IFR) - The UK arm of Spanish banking powerhouse Banco Santander bought back hybrid debt in a tender from investors on Friday to boost its core tier 1 ratio ahead of the stricter capital requirements in Basel III. Bank of America Merrill Lynch and Barclays handled the trade that saw Santander UK purchase GBP1.88bn of several series of Tier 1 and Tier 2 notes out of a total of around GBP2.6bn that was included in the tender offer. In a statement, Santander UK said it launched the exercise to enhance the quality of its capital structure through the generation of core tier one. Throughout the past 12 months European banks have bought back subordinated debt at a discount to par, providing accounting gains and boosting capital ratios. Santander UK said it had a core tier one ratio of 11.7% prior to the offer which targeted 10 securities across dollars, euros and sterling. The largest proportion of bonds were bought back in dollars. It purchased USD739.374m of its 7.95% Term Subordinated Securities due 2029, and USD633.6m of its 8.963% Non-Cumulative Trust Preferred Securities. As for the European currency-denominated exercise, investors sold all of the EUR150m subordinated floating rate note due 2017, and virtually all of the EUR100m callable step-up sub FRN due 2017 was tendered. In the sterling buy-back, demand was not so high. Almost all of the GBP150m 5.25% step-up subordinated callable note due 2023 was repurchased, but only GBP77.19m of the GBP150m 10.125% subordinated guaranteed bonds due 2023 and GBP95.19m of the GBP150m 11.5% subordinated guaranteed bonds due 2017. (Reporting by Aimee Donnellan; editing by Alex Chambers, Julian Baker) Link this Share this Digg this Email Reprints

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