LONDON (ShareCast) - West Bromwich Building Society has agreed a debt-for-equity swap with bondholders that will boost its financial strength and maintain its independence.
It has reached a deal whereby £182.5m of subordinated debt
will be exchanged for a new instrument, Profit Participating Deferred Shares (PPDS), which will qualify as core tier 1 capital.
On a pro-forma basis, Britain's eighth-largest building society's core tier 1 ratio will increase from 6.8% to 11.6%.
"The exchange of the society's tier 2 sub-debt into core tier 1 capital materially strengthens our capital position and, under stress-test scenarios, has demonstrated our ability to withstand a further significant deterioration in market conditions," said chief executive Robert Sharpe.
"We have a solvency ratio of 14% and, post exchange of the sub-debt, a core tier 1 ratio of 11.6%, ratios which are amongst the strongest in the sector. With this firm footing, we are well positioned for the future."
The society, which operates 46 branches and has about 350,000 customers, has a £1bn commercial property loan book, £3bn in buy-to-let mortgages and £2.6bn in prime residential mortgages.
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