Moody's confirms RBS

Moody's Investors Service said it confirmed Royal Bank of Scotland plc's ratings, concluding a review for downgrade. The A3 long-term debt rating was confirmed with a negative outlook, and the D+ standalone bank financial strength rating was confirmed with a stable outlook.

Moody's also confirmed the supported long-term ratings of the holding company, Royal Bank of Scotland Group plc, at Baa1 with a negative outlook.

The rating action follows the conclusion of the review announced by the U.K. government in June and the subsequent announcement that RBS will not be legally separated into a "good bank" and "bad bank." Instead, RBS will continue to run down its non-core assets portfolio, albeit with a somewhat different composition and within a shorter timeframe.

The agency said the more rapid removal of high-risk and capital-consuming assets from the group eliminates the risk of losses to creditors that could have resulted from alternative options to run down RBS' poor-quality assets, such as setting up an external bad bank. However, this strategy is not immune from execution risk, Moody's added.

The negative outlook is in line with the negative outlook on the long-term ratings of all large U.K. banks.

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