National Bank of Canada (“National Bank”) today announced that it has
entered into an agreement with a group of agents led by National Bank
Financial Inc. for the issuance of $500 million of Limited Recourse
Capital Notes, Series 1 (Non-viability Contingent Capital (NVCC))
(Subordinated Indebtedness) (the “Notes”).
The Notes will bear interest at a rate of 4.300% annually, payable
semi-annually, for the initial period ending on but excluding November
15, 2025. Thereafter, the interest rate on the Notes will reset every
five years at a rate equal to the prevailing 5-year Government of
Canada Yield plus 3.943%. The Notes will mature on November 15, 2080.
Concurrently with the issuance of the Notes, National Bank will
issue Non-Cumulative 5-Year Fixed Rate Reset First Preferred Shares,
Series 44 (non-viability contingent capital (NVCC)) (the “Series 44
Preferred Shares”) to be held by Computershare Trust Company of Canada
as trustee for a newly-formed trust (the “Limited Recourse Trust”). In
case of non-payment of interest on or principal of the Notes when due,
the recourse of each Note holder will be limited to that holder’s
proportionate share of the Limited Recourse Trust’s assets, which will
consist of Series 44 Preferred Shares except in limited circumstances.
National Bank may redeem the Notes during the period from October 15
to and including November 15, commencing in 2025 and every five years
thereafter, only upon the redemption by National Bank of the Series 44
Preferred Shares held in the Limited Recourse Trust, in accordance
with the terms of such shares and with the prior written approval of
the Superintendent of Financial Institutions (Canada) (the
“Superintendent”), in whole on not less than 15 nor more than 60 days’
The purpose of the sale of the Notes is to enlarge National Bank’s
Tier 1 capital base with a view to optimizing National Bank’s capital
structure within the parameters prescribed by the Superintendent for
bank capital requirements. The net proceeds from the sale of the Notes
will be added to National Bank’s general funds and will be utilized
for general banking purposes. The expected closing date is on or about
September 9, 2020. National Bank intends to file in Canada a
prospectus supplement to its August 17, 2020 base shelf prospectus in
respect of this issue.
The Notes have not been and will not be registered under the U.S.
Securities Act of 1933, as amended, or under any state securities
laws, and may not be offered, sold, directly or indirectly, or
delivered within the United States of America and its territories and
possessions or to, or for the account or benefit of, United States
persons except in certain transactions exempt from the registration
requirements of such Act. This press release shall not constitute an
offer to sell or a solicitation to buy securities in the United States.