Natwest launches $250 million issue.

Britain's National Westminster Bank on Monday launched a $250 million offering of noncumulative preference shares in the United States.

In addition, Citicorp increased a preferred stock offering to $325 million from $250 million amid solid demand for the issue. Underwriters led by Lehman Brothers priced the issue at an 8% dividend yield.

Natwest is the second foreign bank to raise capital in the United States in the last week. Spain's Banco Santander earlier issued $195 million in preferred shares.

10 Million Shares

The British bank's issue will cover 10 million noncumulative preference shares with a nominal value of $25 each.

Each of the shares will be represented by one American depositary share.

The lead manager is Goldman. Sachs & Co.

Price talk on the dividend was between 8 3/4% and 8 1/8%.

The issue will count as Tier 1 capital. A spokesman for Natwest declined to specify the impact of the issue on the bank's Tier 1 ratio.

At yearend, Natwest's Tier 1 ratio stood at 5.2%, compared with 5.5% a year earlier.

International capital adequacy standards require banks to maintain Tier 1 ratios at a minimum of 4%.

The group's total capital ratio rose to 9.8% from 9.6% last year.

The Natwest official and analysts said the decision to tap the U.S. market was mainly aimed at taking advantage of current low interest rates and other favorable conditions for issuers.

"It's a sort of rolling process, and Royal Bank of Scotland, Natwest, and Barclays have already done it several times," said Julian Robins, a bank analyst with Barclays de Zoete Wedd in London.

Analysts noted that Natwest also needs to regularly raise dollar-denominated capital to back some $30 billion in assets held by the bank's U.S. branches and U.S. retail banking unit, National Westminster Bancorp.

"They certainly have adequate capital in terms of the international minimums," said Martin Cross, a bank analyst with S.G. Warburg in London.

"But there's a feeling coming over British bank management that it is desirable to have premium capital ratios, especially if you are a big bank and want to impress not only regulators but rating agencies, too."

Mr. Cross noted that Natwest and other big British banks still have a large amount of nonperforming loans. Natwest's ratio of nonaccruing loans to total loans stood at 4.7% at yearend.

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