RBS prepares for debt buyback - report

The paper said the move, which could be announced in the next two weeks, could see at least 10bn of the part-nationalised bank's 28bn-debt being bought back at premium to current prices.

The bank is in the process of finalising details, but is looking into contingent convertibles, a new-style instrument that absorbs losses in times of stress and also provides capital at low cost, the FT said.

Such a move would follow on from Dutch bank Rabobank, which issued a 1.25 billion-euro ($1.7 billion) 10-year contingent senior bond last week.

Bonds with so-called contingent features came into the spotlight last year when Lloyds Banking Group issued a subordinated bond that converts into equity if the bank's capital falls below a certain level.