National Bank of Canada plans to redeem its 4.300% Limited Recourse Capital Notes, Series 1, on Nov. 15, 2025, taking out $500 million of subordinated indebtedness that counts toward regulatory capital.
The move continues a steady tightening of the bank’s liability structure as higher for longer interest rates shape funding decisions across the sector.
National Bank disclosed the plan in a press release dated Sept.19, 2025, and said the redemption has received approval from the Office of the Superintendent of Financial Institutions.
The notes will be repurchased at par plus accrued interest up to, but excluding, the redemption date, with cash settling on the first business day that follows because Nov. 15 is not a business day.
The announcement also confirms that the bank will redeem the 500,000 Non-Cumulative 5 Year Fixed Rate Reset First Preferred Shares, Series 44, held in the related limited recourse trust. The bank’s statement is available on its website and provides the formal details and timing of the transaction.
The notes, commonly known as LRCNs, are Canadian instruments designed to qualify as non-viability contingent capital. They are structured as subordinated debt with a limited recourse feature that links to a basket of bank preferred shares.
Under stress, the structure shifts loss absorption to the equity-like component. In ordinary markets, LRCNs let banks diversify term funding and optimize their capital mix within OSFI rules.
National Bank’s decision is consistent with a pattern seen around first call dates, when issuers weigh the economics of leaving a security outstanding against the cost of new capital.
The Series 1 notes carry a 4.300% coupon. In today’s rate environment, the calculus is more nuanced than during the ultra-low period when these structures first gained traction.
If the bank replaces the redeemed LRCNs with fresh regulatory capital, the all-in cost will reflect current credit spreads and benchmark yields, which remain elevated compared with pre 2022 norms.
If it chooses to operate with a different capital mix, the redemption could modestly reduce interest expense but may require other balance-sheet adjustments to maintain regulatory buffers.
The redemption of the linked Series 44 preferred shares is a standard companion step that unwinds the limited recourse trust in tandem with the notes.
The key practical takeaway is that both the debt and the related preferred shares are being taken out together on the schedule described by the bank, subject to the settlement shift to the next business day.
National Bank described the action as part of its ongoing management of regulatory capital, and it cited OSFI approval. As of July 31, 2025, the bank reported $553 billion in assets and trades on the Toronto Stock Exchange under the symbol NA.
The redemption date is Nov. 15, 2025, with proceeds delivered on the first business day that follows that timing influences reinvestment decisions in the final stretch of the year, when liquidity can thin and new issuance windows can be brief.
If the bank returns to market with a new LRCN tranche or alternative capital instrument, the pricing will provide a fresh read on demand for Canadian bank capital and on how investors are marking the risk of non-viability structures after two years of rate volatility.
The action does not change the bank’s strategy across Personal and Commercial Banking, Wealth Management, Financial Markets, or U.S. Specialty Finance and International. It does, however, underscore management’s willingness to use optionality embedded in its capital stack.
The bank’s communication keeps the door open to future capital moves as conditions warrant, which is consistent with the sector’s prudent approach to balance sheet management.
