RBS put on review for downgrade
Royal Bank of Scotland Group Plc's credit rating was put on review for downgrade by Moody's Investors Service, which cited the government's decision to consider a breakup of the bailed-out British lender.
Moody's put Royal Bank of Scotland Group's long-term ratings and Royal Bank of Scotland Plc's A3 long-term debt and deposit ratings on review, according to a statement on Friday.
The Scottish bank owns RBS Citizens Financial Group, the parent of RBS Citizens Bank of Pennsylvania. RBS Citizens is the Pittsburgh area's second-largest bank.
Chancellor of the Exchequer George Osborne hired Rothschild this week to assess the case for breaking up RBS and splitting off its toxic assets into a so-called bad bank. The Treasury is struggling to cut its 81 percent stake in the lender, with the shares trading for less than the price the government paid for them when it provided the costliest bank bailout in history.
Stephen Hester quit last month as RBS' chief executive officer.
“It's not surprising given the uncertainty surrounding the future of RBS,” said Simon Maughan, a banking analyst at Olivetree Securities Ltd. in London. “There are big issues about who is going to run RBS, whether it's going to be allowed to have an investment bank and what impact that is going to have on profitability.”
RBS' stock fell 2.6 percent in London trading on Friday, extending its decline this year to almost 15 percent. Edinburgh-based RBS is the worst-performing British bank stock this year.
“Moody's action reflects the further uncertainty for bondholders resulting from the U.K. government's recent announcement that it is examining the merit of a possible breakup of RBS and how this could be achieved,” the ratings company said. “Some of these options may entail losses for creditors.”
Splitting the bank could increase the risk of losses, especially for junior bondholders, as assets are sold. A smaller bank would also be less profitable, Moody's said.
The ratings company said it expects to complete its review after the government decides what to do with RBS, a decision slated for the autumn.
Barclays Plc, Britain's third-largest bank by market value, Deutsche Bank AG and Credit Suisse Group AG had their credit ratings lowered this week by Standard & Poor's as new rules and “uncertain market conditions” threaten their business.
Bloomberg News contributed to this report.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Earlier openings make Black Friday shopping easier for bargain-hunters
- October mine inspections result in 127 citations
- Florida roommates find a career in playing video games on web channel Twitch
- Committee looks into beneficial uses of coal ash
- Retailers court web customers with free shipping
- Retailers that won’t open on Thanksgiving hope move pays off
- Company seeks to reopen coal mine in Nottingham, Washington County
- Federal agency checking whether Highmark has enough doctors in Medicare plan
- Iron ore price decline hurts U.S. Steel’s cost advantage over rivals
- Amusement parks fight off home entertainment threat
- Westinghouse to construct colossal nuke plant in Turkey