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Royal Bank Of Canada Announces Preferred Share Issue

TORONTO, Jan. 21, 2014 /CNW/ - Royal Bank of Canada (RY on TSX and NYSE) today announced an inaugural Basel III-compliant domestic public offering of $200 million of Non-Cumulative, 5-Year Rate Reset Preferred Shares Series AZ.

Royal Bank of Canada will issue 8 million Preferred Shares Series AZ priced at $25 per share and holders will be entitled to receive a non-cumulative quarterly fixed dividend for the initial period ending May 24, 2014 in the amount of $0.3123 per share, to yield 4.00 per cent annually. The bank has granted the Underwriters an option, exercisable in whole or in part, to purchase up to an additional 2 million Preferred Shares Series AZ at the same offering price.

Subject to regulatory approval, on or after May 24, 2019, the bank may redeem the Preferred Shares Series AZ in whole or in part at par. Thereafter, the dividend rate will reset every five years at a rate equal to 2.21 per cent over the 5-year Government of Canada bond yield. Holders of Preferred Shares Series AZ will, subject to certain conditions, have the right to convert all or any part of their shares to Non-Cumulative Floating Rate Preferred Shares Series BA on May 24, 2019 and on May 24 every five years thereafter.

Holders of the Preferred Shares Series BA will be entitled to receive a non-cumulative quarterly floating dividend at a rate equal to the 3-month Government of Canada Treasury Bill yield plus 2.21 per cent. Holders of Preferred Shares Series BA will, subject to certain conditions, have the right to convert all or any part of their shares to Preferred Shares Series AZ on May 24, 2024 and on May 24 every five years thereafter.

The offering will be underwritten by a syndicate led by RBC Capital Markets. The expected closing date is January 30, 2014.

We routinely undertake funding transactions to maintain strong capital ratios and a cost effective capital structure. Net proceeds from this transaction will be used for general business purposes.

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