Fitch Ratings on Aug. 28 assigned Metro Bank PLC long- and short-term issuer default ratings of BB+/B, with the long-term issuer rating on Rating Watch Negative, in line with other U.K. banks.
The rating agency said the negative watch reflects the increased risk that a disruptive no-deal Brexit could lead to a negative rating action, which would most likely be the assignment of a negative outlook on the long-term issuer default rating. The negative outlook would reflect the likely risks to the bank's ability to execute its growth strategy in a more difficult operating environment, Fitch added.
Fitch also assigned the lender a support rating of 5, a support rating floor of No Floor and a viability rating of "bb+."
Fitch noted that the bank's long-term issuer default rating is driven by and is at the same level as its viability rating, which it said reflects the combination of a relatively immature and undiversified business model that requires fast growth to become profitable, while the short-term issuer default rating corresponds to the long-term rating. Strong liquidity, solid capital levels and the expectation of continued low asset impairments underpin Metro Bank's ratings, the agency added.
Meanwhile, Fitch said the support rating and support rating floor reflects its view that senior creditors cannot rely on extraordinary support from the sovereign in the event the institutions become nonviable, noting that it believes that the U.K. will likely require senior creditors to participate in losses for resolving even large banking groups.
