Treasury and RBS announced that Treasury's £5 billion preference shareholding in RBS will be replaced by approximately £5 billion of new ordinary shares offered to eligible RBS shareholders pro rata to their existing shareholdings, this offer being fully underwritten by Treasury. This will increase its Core Tier One capital ratio by almost 1%. RBS has agreed to extend to larger commercial and industrial companies the UK mortgage and SME lending commitments made to Treasury last October, and increase its UK lending by £6 billion using the savings resulting from eliminating the preference share dividend.