Moody's on Dec. 7 upgraded to Baa1 from Baa2 the long-term deposit ratings of Clydesdale Bank Plc, among other ratings actions, concluding the review initiated Sept. 15.
The rating agency revised the outlook on the long-term deposit ratings to positive from Ratings under Review.
Also upgraded were the lender's stand-alone baseline credit assessment to baa2 from baa3, its adjusted baseline credit assessment to baa2 from baa3, its long-term counterparty risk assessment to A2(cr) from A3(cr) and its short-term counterparty risk assessment to P-1(cr) from P-2(cr). Meanwhile, the bank's short-term deposit ratings were confirmed at P-2.
Moody's said the positive outlook reflects its expectation that the U.K.-based lender will issue senior unsecured securities from its holding company, CYBG Plc, to meet the Minimum Requirement for Own Funds and Eligible Liabilities requirements. Assuming constant regulatory requirements, Clydesdale will be required to have minimum MREL of 21.5% of risk-weighted assets by Jan. 1, 2020, and 28.7% by Jan. 1, 2022.
Moody's noted that Clydesdale has changed its strategy by shifting its business in recent years to retail and small and medium-sized enterprise clients and away from commercial real estate and other historically problematic areas, which the agency views positively.
Concurrently, the outlook on CYBG was revised to No Outlook from Rating under Review.