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Fitch changes some RBS ratings
Fitch Ratings said it upgraded the individual ratings of Royal Bank of Scotland Group plc and Royal Bank of Scotland plc to D/E from E and removed them from Rating Watch positive.
The agency also upgraded three series of Royal Bank of Scotland Group's preference shares and its $1.2 billion regulatory innovative tier 1 securities to B+ from B and removed them from Rating Watch evolving, downgraded six series of dated subordinated bonds to A from A+ and removed them from Rating Watch negative and affirmed the remaining preference shares and tier 1 securities at CC and all other subordinated bonds at A+.
Fitch affirmed Royal Bank of Scotland's upper tier 2 securities at B+ and removed them from Rating Watch evolving, lowered its €1 billion subordinated bonds due 2021 to A from A+ and removed them from Rating watch negative and affirmed its other subordinated bonds rated at A+.
The other ratings were affirmed, including the AA- long-term issuer default and senior unsecured debt ratings, F1+ short-term issuer default rating, 1 support rating and AA- support rating floor.
The outlook is stable.
The agency said the upgrade of the individual ratings reflects improvements in the group's capital combined with some progress in restructuring the balance sheet and signs in the third quarter that credit losses may be leveling off.
The individual ratings continue to reflect the substantial challenges faced by management in achieving its strategic and financial goals and the group's heavy reliance on wholesale funding, Fitch said.
The rating actions in respect of the group's hybrid securities reflect which ones have "must pay" features and which ones allow coupon deferral, the agency said. The European Commission requires that the group and its subsidiaries do not make discretionary payments of coupons or dividends on hybrid capital securities for a two-year period starting no later than April 30.
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