Fitch Ratings on Dec. 14 upgraded several ratings of Royal Bank of Scotland Group PLC and certain units, citing the British banking group's improved risk profile.
The agency upgraded the long- and short-term issuer default ratings of the group, Royal Bank of Scotland International Ltd., NatWest Markets PLC, NatWest Markets NV and NatWest Markets Securities Inc. to A/F1 from BBB+/F2. Those of Royal Bank of Scotland PLC, National Westminster Bank PLC and Ulster Bank Ltd. were upgraded to A+/F1 from A-/F2. The outlook on the long-term ratings is stable.
The senior unsecured debt ratings of the group and NatWest Markets PLC were also upgraded to A/F1 from BBB+/F2. The same ratings of National Westminster Bank were upgraded to A+/F1 from A-/F2 and of NatWest Markets NV to A from BBB+.
The viability ratings of the group, Royal Bank of Scotland PLC and National Westminster Bank were upgraded to "a" from "bbb+," while their support rating and support rating floors were affirmed at 5 and No Floor, respectively. NatWest Markets PLC's viability rating of "bbb+" and support rating floor of No Floor were withdrawn, while its support rating was upgraded to 1 from 5 and removed from Rating Watch Positive.
The support ratings of Royal Bank of Scotland International, NatWest Markets Securities and NatWest Markets NV were upgraded to 1 from 2, while that of Ulster Bank was affirmed at 1. The derivative counterparty ratings of NatWest Markets PLC and NatWest Markets Securities were upgraded to A(dcr) from BBB+(dcr).
Fitch said that the group's risk profile has improved significantly after making progress on its ongoing restructuring and resolving major legacy matters. The group's viability rating mainly factors in the group's strong capitalization and funding and liquidity, which make up for remaining weaknesses in profitability.
Fitch believes that the group should be able to withstand a moderate economic blow due to Brexit and maintain its ratings, unless a disruptive no-deal Brexit occurs or economic and market expectations deteriorate significantly.
With NatWest Markets PLC's viability rating withdrawn, the long-term issuer default rating is now based on institutional support as the unit is unlikely to have a meaningful stand-alone franchise without the support of its parent.