Moody’s puts RBS on review for downgrade as Osborne weighs split
MOODY'S INVESTORS SERVICES has put Royal Bank of Scotland Group PLC on review for a downgrade as the British government considers a breakup of the bailed-out lender.
BLOOMBERG FILE PHOTO/MATTHEW LLOYD
By Gavin Finch Bloomberg News
LONDON - 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 break-up 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 today.
The move “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,” Moody’s said in a statement today.
Chancellor of the Exchequer George Osborne said last month the U.K. government will investigate the case for breaking up RBS and hiving off its toxic assets into a “bad bank.” Splitting the bank could trigger losses, especially for junior bondholders, as assets are sold and a smaller bank’s profitability would be lower, 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.
RBS, which is 81 percent state-owned, is weighed down by too many poor assets, Osborne said. The Edinburgh-based lender received a 45.5 billion-pound ($68 billion) bailout in 2008 and 2009, the costliest in banking history.