The rating of A- is based on the credit fundamentals of the entire group, The Royal Bank of Scotland Group Plc. The rating reflects the group’s strong UK retail and corporate franchise which has demonstrated encouraging resilience throughout the restructuring process. The group’s risk profile in regards to asset quality, liquidity and solvency have also improved to reassuring levels. The evolving business model, however, has yet to translate into reliable and sustainable earnings, with legacy issues and restructuring costs continuing to overshadow the performance of the core bank. As well, potential conduct costs related to US mortgage-backed securities and resolving state aid obligations remain important issues for the group’s financial soundness.

Majority ownership by the UK government is currently a supporting factor for the A- rating, accounting for a single notch of uplift. As the UK government reduces its majority ownership significantly, this rating uplift is likely to be removed. At that time, the rating agency would expect the group’s own credit profile to have materially improved.

Download updated rating report on RBS