15th Dec 2015 12:41
LONDON (Alliance News) - Ratings agency Moody's on Monday lifted its outlook on Royal Bank of Scotland Group PLC and its main operating subsidiary to positive from stable.
"The positive outlook reflects the substantial progress the firm has made in its restructuring plan and Moody's expectation that its credit fundamentals will continue to improve over the next 12-18 months," the ratings agency said.
RBS has been focused on selling off unwanted assets in order to boost capital and financial strength, favouring a strategy of lending to customers in the UK and Ireland and abandoning its the global ambitions of the past. It has sold off its Citizens retail bank in the US and is in the process of shrinking its corporate and institutional banking business.
Moody's affirmed the A3 supported long-term deposit and senior unsecured debt ratings of the main operating subsidiary, which includes the Royal Bank of Scotland and Natwest brands, following the affirmation of the bank's ba1 standalone baseline credit assessment.
The long-term senior unsecured debt rating of the holding company, Royal Bank of Scotland Group, was affirmed at Ba1.
The ratings agency also affirmed the subsidiary's short-term rating of Prime-2 and the group's short-term rating of Non-Prime.
"RBS has made substantial progress in the implementation of its multi-year restructuring plan, which has resulted in stronger regulatory capitalisation, lower asset risk and improved funding and liquidity", said Andrea Usai, a Moody's vice president and senior credit officer.
"However, there are still significant downside risks in the short- to medium-term that could arise either from the implementation of the plan or from other sources, such as further litigation and conduct costs, which together with large budgeted restructuring charges, will continue
to depress profits", Usai added.
Shares in RBS were up 1.3% at 286.30 pence on Tuesday.
By Samuel Agini; [email protected]; @samuelagini
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