Regulator blocks bond repayments by RBS

Royal Bank of Scotland will not exercise options to redeem more than $1.5bn of subordinated debt next month after regulators objected to it using state aid to repay the low-ranked bondholders.

RBS, 70 per cent owned by the Government, also said that future decisions on whether or not to redeem bonds would also be subject to approval from the Financial Services Authority, the finance sector watchdog.