NIBC Bank N.V. announces consent solicitation in respect of its outstanding U.S.$100,000,000 CMS linked perpetual debt securities (ISIN: XS0215294512)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS (INCLUDING PUERTO RICO, THE U.S. VIRGIN ISLANDS, GUAM, AMERICAN SAMOA, WAKE ISLAND AND THE NORTHERN MARIANA ISLANDS, ANY STATE OF THE UNITED STATES OF AMERICA AND THE DISTRICT OF COLUMBIA) (THE "UNITED STATES") OR TO ANY U.S. PERSON (AS DEFINED BELOW) OR IN OR INTO ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS ANNOUNCEMENT.

NIBC BANK N.V.

(formerly known as NIB Capital Bank N.V.,

incorporated with limited liability under the laws of The Netherlands

and having its corporate seat in The Hague)

("NIBC" and the "Issuer")

NIBC ANNOUNCES CONSENT SOLICITATION IN RESPECT OF ITS OUTSTANDING U.S.$100,000,000 CMS LINKED PERPETUAL DEBT SECURITIES (ISIN: XS0215294512)

NIBC announces today an invitation (such invitation, the "Consent Solicitation") to eligible holders of its outstanding U.S.$100,000,000 CMS Linked Perpetual Debt Securities (ISIN: XS0215294512) (the "Securities") to consent to the execution of the Supplemental Trust Deed to effect, inter alia: (1) the modification of the terms and conditions (the "Conditions") of the Securities such that: (i) for all Interest Periods commencing from and including the Interest Payment Date in March 2024 (which is expected to be 24 March 2024), the Rate of Interest is calculated by reference to the USD SOFR Spread Adjusted Swap Rate (calculated using the ARRC Recommended Methodology, as set out in the Consent Solicitation Memorandum (as defined below)), as opposed to being calculated using the USD LIBOR swap rate; (ii) new fallback provisions relating to the USD SOFR ICE Swap Rate (or any component thereof) for the purposes of calculating the USD SOFR Spread Adjusted Swap Rate (including fallback provisions in case a Benchmark Transition Event occurs with respect to the USD SOFR ICE Swap Rate (or any component thereof)) are included; and (iii) as a consequence of the foregoing changes, a Contractual Recognition of Bail-in Clause is included pursuant to Article 55(2) of the BRRD; and (2) consequential amendments to Clause 19.2 (Modification) of the Trust Deed in respect of the new fallback provisions.

The Issuer will pay a Consent Fee to Eligible Securityholders that submit valid electronic voting instructions to the Tabulation Agent by [31] January 2024 4:00 p.m. (London time) / 5:00 p.m. (CET) (“the Expiration Deadline”), subject to the successful passing of the Extraordinary Resolution and the satisfaction of the other conditions set out in the Consent Solicitation Memorandum, on the Fee Payment Date. The "Consent Fee" shall be an amount equal to 0.50 per cent. of the principal amount of the relevant Securities that are the subject of the relevant electronic voting instruction, which will be payable to Eligible Securityholders in the circumstances described the Consent Solicitation Memorandum.

Ineligible Securityholders who submit a valid Ineligible Holder Instruction waiving their right to attend and vote (or be represented) at the Meeting by the Expiration Deadline will also be eligible to receive an amount equal to the Consent Fee (the Ineligible Holder Instruction Fee), subject to the successful passing of the Extraordinary Resolution and the satisfaction of the other conditions set out in the Consent Solicitation Memorandum, on the Fee Payment Date by following the procedures specified in the Notice.

The full terms and conditions of the Consent Solicitation are contained in the Consent Solicitation Memorandum dated [12] January 2024 (the "Consent Solicitation Memorandum") prepared by NIBC, which is available to Eligible Securityholders from the Tabulation Agent (including on its website via the link https://deals.is.kroll.com/nibc).

A notice convening the meeting of the holders of the Securities, to be held at the offices of Clifford Chance LLP at Droogbak 1A, 1013 GE Amsterdam, The Netherlands on [5] February 2024 has been given to holders of the Securities ("Securityholders") in accordance with the Conditions on the date of this announcement, including by way of publication on NIBC's website (https://nibc.com/), by delivery to the Clearing Systems and via the website of Euronext Amsterdam.

 

BACKGROUND TO CONSENT SOLICITATION

Status of LIBOR

In July 2017, the UK Financial Conduct Authority (the "FCA") announced that it would no longer persuade or compel banks to submit rates for the calculation of the LIBOR benchmark after the end of 2021 and explained they expected that some panel banks would cease contributing to LIBOR panels at such time.

On 5 March 2021, the administrator of LIBOR, ICE Benchmark Administration Limited ("IBA") announced its intention to cease the publication of all 35 LIBOR settings, the majority on 31 December 2021, and for certain USD LIBOR settings, on 30 June 2023, subject to the rights of the FCA to compel continued publication. The IBA notified the FCA of its intention and, on the same date, the FCA published an announcement stating that all 35 LIBOR settings would either cease to be provided by any administrator or no longer be representative of the underlying market and economic reality (and that representativeness would not be restored) immediately after: (i) 31 December 2021, in the case of all sterling, euro, Japanese Yen and Swiss Franc, and certain U.S. Dollar settings; or (ii) 30 June 2023, in the case of the remaining U.S. Dollar settings.

The Alternative Reference Rates Committee ("ARRC") was convened by the Federal Reserve Board and the Federal Reserve Bank of New York to help ensure a successful transition from USD LIBOR to a more robust reference rate and to this end the ARRC has published a number of reports and guiding principles concerning its recommendations for spread-adjusted fallbacks for contracts referencing USD LIBOR. Following extensive consultations and discussion of potential candidates, the ARRC identified SOFR as the rate that represents best practice for use in certain new USD derivatives and other financial contracts. The Federal Reserve began to publish SOFR in April 2018.

USD swap rates based on USD LIBOR swap transactions are determined by reference to the USD LIBOR ICE Swap Rate (available in various tenors) calculated and administrated by the IBA (for swaps referencing 3-month USD LIBOR) ("USD LIBOR ICE Swap Rate").

In March 2021, the ARRC proposed a suggested fallback formula for the USD LIBOR ICE Swap Rate which instead references the USD SOFR ICE Swap Rate, adds The International Swaps and Derivatives Association, Inc. ("ISDA") fallback spread adjustment for 3-month USD LIBOR (26.161 bps) and applies technical adjustments to account for differences in payment frequency and day count conventions between USD LIBOR and USD SOFR swaps (the "ARRC Recommended Methodology").

In June 2021, ISDA launched a consultation to seek feedback on the incorporation in the ISDA definitions of a fallback formula for, amongst other things, the USD LIBOR ICE Swap Rate (using the ARRC Recommended Methodology). In July 2021, ISDA announced the results of this consultation, which indicated that a significant majority of respondents agreed with such fallback formula and that the conditions were satisfied for them to be incorporated in the ISDA definitions. As a result of this, on 10 November 2021, ISDA published Supplement 88 to the 2006 ISDA Definitions which updated provisions in the 2006 ISDA Definitions that referred or related to the USD LIBOR ICE Swap Rate to refer to a fallback rate calculated on the basis of ARRC Recommended Methodology.

On 8 November 2021, the IBA launched the USD SOFR ICE Swap Rate for use in financial contracts and instruments. On 30 August 2022, the IBA announced its intention to cease the publication of all USD LIBOR ICE Swap Rate® benchmark settings for all tenors immediately after the cessation of publication of USD LIBOR on 30 June 2023 subject to a consultation with market participants. Subsequently, on 14 November 2022, the IBA published a feedback statement from this consultation in which it stated that it would cease the publication of all USD LIBOR ICE Swap Rate benchmark settings for all tenors immediately after publication on 30 June 2023.

Rationale for the proposed amendments to the Rate of Interest

As noted above: (i) the USD SOFR Spread Adjusted Swap Rate is calculated in accordance with the ARRC Recommended Methodology and on the basis of the ARRC Recommended Formula included therein; and (ii) ISDA's consultation in June 2021 (which sought feedback from market participants on the use of the ARRC Recommended Methodology as a fallback for the USD LIBOR ICE Swap Rate) concluded that a majority of respondents agreed with the use of the ARRC Recommended Methodology. As such, the Proposed Amendments seek to align with the industry approved methodologies recommended by the ARRC and ISDA as fallbacks to the USD LIBOR ICE Swap Rate. 

If the Extraordinary Resolution is not passed, the ultimate contractual fallback under the terms of the Securities is that the Rate of Interest will be the same as the rate determined in relation to the preceding Interest Determination Date.

Rationale for addition of contractual recognition of bail-in clause

The directive providing for the establishment of an EU-wide framework for the recovery and resolution of credit institutions and investment firms (Directive 2014/59/EU) (known as the "Bank Recovery and Resolution Directive" or "BRRD") entered into force on 2 July 2014 and was subsequently implemented in The Netherlands through the BRRD Implementation Act (Implementatiewet Europees kader voor herstel en afwikkeling van banken en beleggingsondernemingen) which amended the Dutch Financial Supervision Act (Wet op het financieel toezicht) with effect from 26 November 2015.

Article 55(1) of the BRRD requires institutions to include "a contractual term by which the creditor or party to the agreement or instrument creating the liability recognises that the liability may be subject to the write-down and conversion powers and agrees to be bound by any reduction of the principal or outstanding amount due, conversion or cancellation that is effected by the exercise of those powers by a resolution authority" (a "Contractual Recognition of Bail-in Clause") where, inter alia, such liability is governed by the law of a third country and is "issued or entered into" after the date on which the transposition of the BRRD into national law became applicable.

Pursuant to Article 43(2)(b) of Commission Delegated Regulation (EU) 2016/1075 of 23 March 2016, as amended (the "Delegated Regulation"), Article 55(1) of the BRRD is applicable to liabilities created before such date of transposition of the BRRD into national law where they are subject to "material amendment" which is defined in Article 42(1) of the Delegated Regulation as being "an amendment, including an automatic amendment, made after that date and affecting the substantive rights and obligations of a party to a relevant agreement".

Following the UK’s withdrawal from the European Union and the end of the transitional period, English law has now become a third country law. As a result, the Issuer would be required to include a Contractual Recognition of Bail-in Clause at the same time as the other Proposed Amendments.

Securityholders should note that Article 55(2) of the BRRD specifies that, in any event, the failure to include a Contractual Recognition of Bail-in Clause "shall not prevent the resolution authority from exercising the write down and conversion powers in relation to that liability".

As of the date hereof, applicable authorities have communicated that the preferred resolution strategy for the Issuer is normal insolvency, which means that, should it fail, the plan is that the Issuer would be liquidated under normal insolvency law and so resolution would not be triggered (and the bail-in tool not used). There is no guarantee, however, that such plan will be followed in a liquidation or resolution scenario, and on 18 April 2023 the European Commission adopted a proposal to promote the use of resolution tools for small and medium sized banks.

On this basis, and as a consequence of the amendments proposed to the Conditions in respect of the determination of the Rate of Interest (as set out in the Consent Solicitation Memorandum) and the Securities being governed by English law, the Issuer is required to include a Contractual Recognition of Bail-in Clause in the Conditions pursuant to Article 55(2) of the BRRD and in accordance with customary market practice following the UK’s withdrawal from the European Union and the end of the transitional period.

 

NOTICE OF SECURITYHOLDER MEETING

 

Further details on the Consent Solicitation can be obtained from:

SOLE SOLICITATION AGENT

NatWest Markets N.V.

Claude Debussylaan 94

1082 MD Amsterdam

The Netherlands

Attention: Liability Management

Telephone: +44 20 7085 6124

Email: NWMLiabilityManagement@natwestmarkets.com

Requests for documentation and information in relation to the procedures for delivering consent instructions should be directed to:

 

TABULATION AGENT

Kroll Issuer Services Limited

The Shard

32 London Bridge Street

London SE1 9SG

United Kingdom

Telephone: +44 207 704 0880

Attention: Arlind Bytyqi / Paul Kamminga

Email: nibc@is.kroll.com

Website: https://deals.is.kroll.com/nibc

Unless otherwise indicated, capitalised terms used but not otherwise defined in this announcement have the meanings given in the Consent Solicitation Memorandum.

 

DISCLAIMER

THIS ANNOUNCEMENT MUST BE READ IN CONJUNCTION WITH THE NOTICE AND (IN RESPECT OF ELIGIBLE SECURITYHOLDERS) THE CONSENT SOLICITATION MEMORANDUM. THIS ANNOUNCEMENT, THE NOTICE AND THE CONSENT SOLICITATION MEMORANDUM CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE CONSENT SOLICITATION.

IF SECURITYHOLDERS ARE IN ANY DOUBT ABOUT ANY ASPECT OF THE PROPOSALS IN THE NOTICE AND/OR THE ACTION THEY SHOULD TAKE, THEY ARE RECOMMENDED TO SEEK THEIR OWN FINANCIAL ADVICE IMMEDIATELY FROM THEIR BROKER, BANK MANAGER, SOLICITOR, ACCOUNTANT OR OTHER ANOTHER APPROPRIATELY AUTHORISED INDEPENDENT FINANCIAL ADVISER AND SUCH OTHER PROFESSIONAL ADVISERS AS THEY DEEM NECESSARY.

NOTHING IN THIS ANNOUNCEMENT, THE NOTICE OR THE CONSENT SOLICITATION MEMORANDUM OR THE ELECTRONIC TRANSMISSION THEREOF CONSTITUTES OR CONTEMPLATES AN OFFER OF, AN OFFER TO PURCHASE OR THE SOLICITATION OF AN OFFER TO SELL SECURITIES IN THE UNITED STATES OR ANY OTHER JURISDICTION. THE SECURITIES HAVE NOT BEEN, AND WILL NOT BE, REGISTERED UNDER THE SECURITIES ACT, OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES, AND THE SECURITIES MAY NOT BE OFFERED, SOLD OR DELIVERED, DIRECTLY OR INDIRECTLY, WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE OR LOCAL SECURITIES LAWS.

IN ACCORDANCE WITH NORMAL PRACTICE, THE TRUSTEE, THE PRINCIPAL PAYING AGENT AND THE TABULATION AGENT HAVE NOT BEEN INVOLVED IN THE FORMULATION OF THE SECURITYHOLDER PROPOSAL. THE TRUSTEE, THE TABULATION AGENT AND THE SOLE SOLICITATION AGENT EXPRESS NO OPINION ON, AND MAKE NO REPRESENTATIONS AS TO THE MERITS OF, THE SECURITYHOLDER PROPOSAL, THE EXTRAORDINARY RESOLUTION OR THE PROPOSED AMENDMENTS REFERRED TO IN THE EXTRAORDINARY RESOLUTION.

NONE OF THE TABULATION AGENT, THE SOLE SOLICITATION AGENT AND THE TRUSTEE MAKES ANY REPRESENTATION THAT ALL RELEVANT INFORMATION HAS BEEN DISCLOSED TO SECURITYHOLDERS IN OR PURSUANT TO THE NOTICE, THE CONSENT SOLICITATION MEMORANDUM OR OTHERWISE. NONE OF THE TABULATION AGENT, THE SOLE SOLICITATION AGENT AND THE TRUSTEE HAS APPROVED THE DRAFT SUPPLEMENTAL TRUST DEED REFERRED TO IN THE EXTRAORDINARY RESOLUTION AND SECURITYHOLDERS ARE RECOMMENDED TO ARRANGE TO INSPECT AND REVIEW SUCH DRAFT SUPPLEMENTAL TRUST DEED AS PROVIDED IN THE NOTICE. ACCORDINGLY, SECURITYHOLDERS SHOULD TAKE THEIR OWN INDEPENDENT LEGAL, FINANCIAL, TAX OR OTHER ADVICE ON THE MERITS AND THE CONSEQUENCES OF VOTING IN FAVOUR OF THE EXTRAORDINARY RESOLUTION, INCLUDING ANY TAX CONSEQUENCES, AND ON THE IMPACT OF THE IMPLEMENTATION OF THE EXTRAORDINARY RESOLUTION.

NONE OF THE TABULATION AGENT, THE SOLE SOLICITATION AGENT AND THE TRUSTEE ARE RESPONSIBLE FOR THE ACCURACY, COMPLETENESS, VALIDITY OR CORRECTNESS OF THE STATEMENTS MADE IN THE CONSENT SOLICITATION MEMORANDUM OR THE NOTICE, OR OMISSIONS THEREFROM.

NONE OF THIS ANNOUNCEMENT, THE NOTICE OR THE CONSENT SOLICITATION MEMORANDUM CONSTITUTES OR FORMS PART OF, OR SHOULD BE CONSTRUED AS, AN OFFER FOR SALE, EXCHANGE OR SUBSCRIPTION OF, OR A SOLICITATION OF ANY OFFER TO BUY, EXCHANGE OR SUBSCRIBE FOR, ANY SECURITIES OF THE ISSUER OR ANY OTHER ENTITY. THE DISTRIBUTION OF THIS ANNOUNCEMENT AND THE CONSENT SOLICITATION MEMORANDUM MAY NONETHELESS BE RESTRICTED BY LAW IN CERTAIN JURISDICTIONS. PERSONS INTO WHOSE POSSESSION THIS ANNOUNCEMENT OR THE CONSENT SOLICITATION MEMORANDUM COMES ARE REQUIRED TO INFORM THEMSELVES ABOUT, AND TO OBSERVE, ANY SUCH RESTRICTIONS.

UK MIFIR PROFESSIONALS/ELIGIBLE COUNTERPARTIES ONLY / NO UK PRIIPS KID – MANUFACTURER TARGET MARKET (UK MIFIR PRODUCT GOVERNANCE) IS ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ONLY (ALL DISTRIBUTION CHANNELS). NO UK PRIIPS KEY INFORMATION DOCUMENT (KID) HAS BEEN PREPARED.

EU MIFID II PROFESSIONAL INVESTORS/ELIGIBLE COUNTERPARTIES ONLY / NO EEA PRIIPS KID – MANUFACTURER TARGET MARKET (EU MIFID II PRODUCT GOVERNANCE) IS ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ONLY (ALL DISTRIBUTION CHANNELS). NO EEA PRIIPS KEY INFORMATION DOCUMENT (KID) HAS BEEN PREPARED.