National Westminster Bank PLC is readying an issue of at least $200 million of exchangeable subordinated debt, according to capital markets sources.

The bank is expected to issue the subordinated debt, which would have no stated maturity. Under the expected terms, the debt could be changed by the bank into perpetual preferred stock.

The structure of the deal is essentially the same as Barclays Bank used in a $500 million issue earlier this year.

Foreign banks that have issued preferred stock here -- so-called Yankee issues -- have accounted for nearly half the $3.6 billion of bank preferred stock issuance this year, according to Securities Data Co. Natwest itself raised $225 million in a preferred issue in June.

Yankee Issue by Midland

The most recent Yankee issue came from Midland Bank PLC, which priced on Monday a $250 million issue of preferred stock.

European banks have tapped the U.S. market to bolster their capital levels, which have suffered because of deteriorating asset quality during the European recession.

U.S. banks have reduced their preferred stock issuance this year, compared to 1992, because their capital levels are generally adequate. That leaves the field open to European banks.

Natwest's expected exchangeable capital issue would allow the bank to raise Tier 2 capital with the option of swapping it for preferred stock, which counts as Tier 1 capital.

Less Expensive to Issuers

Subordinated debt is less expensive to issuers than preferred stock because interest payments are tax deductible, while stock divident payments are not.

The dividend rate on the preferred stock will be based on today's low prevailing rates.

Natwest could be in the market as early as next week and could raise the issue to as much as $500 million if the market is receptive, sources said.

The bank's Tier 1 capital ratio at the end of June was 5.5%, and its total capital ratio was 10.2%.

Natwest's subordinated debt is rated AA3 by Moody's Investor Service and AA-minus by Standard & Poor's Corp. Its preferred stock is rated A1 by Moody's and A-plus by Standard & Poor's.

Elsewhere in the market, Midland's $250 million issue of noncumulative preferred stock carries a dividend of 8.875%.

The issue is subject to 15% British withholding tax, although that tax can be recovered by both individual investors and some institutional ones. Merrill Lynch was lead manager of the issue, which is rated Baa 1 by Moody's and BBB-plus by Standard & Poor's Corp.

Bankers Trust Files

The British bank is a subsidiary of HSBC Holdings, which is also the parent company of Hongkong and Shanghai Bank.

Bankers Trust New York Corp. filed a shelf registration on Monday for up to $1 billion of debt securities and preferred stock. Underwriters were not named in the filing. The proceeds will be used for general corporate purposes.

Crestar Financial Corp. filed a $300 million shelf registration late Friday. The bank plans to issue subordinated debt, preferred stock, or common stock and use the proceeds for general corporate purposes.

Underwriters may include Morgan Stanley & Co., the filing said.Issue at a Glance NationalIssuer Westminster Bank Perpetual subordinated debt that may beSecurity exchanged for perpetual preferred stockAmount $200 million or more

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