Davis Polk Advises The Royal Bank of Scotland Group plc on Its $2.65 Billion Contingent Convertible Additional Tier 1 Capital Notes Offering

Davis Polk advised The Royal Bank of Scotland Group plc (RBSG), a public limited company incorporated under the laws of Scotland, in connection with its SEC-registered offering of $2.65 billion aggregate principal amount of 8.625% perpetual subordinated contingent convertible additional tier 1 capital notes (callable August 15, 2021, and every five years thereafter) (the “Notes”).

The Notes, governed by New York law, are intended to 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. The Notes are listed on the Irish Stock Exchange.

RBSG is the holding company of a large 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 Reuven B. Young, counsel Connie I. Milonakis and associates Elisabeth Milan and Maxim Van de moortel. Partner John D. Paton and associate Nicholas A. Machen provided U.S. tax advice. Partner Jonathan Cooklin and associate Dominic Foulkes provided U.K. tax advice. Counsel Marcie A. Goldstein provided FINRA advice. Associate Jennifer Wang provided 1940 Act advice. Members of the Davis Polk team are based in the London and New York offices.