In addition, Scope removed the one-notch of rating uplift which was incorporated in the Issuer Rating and the senior debt ratings (but not the AT1 ratings) due to majority ownership by the UK government. The agency considers that this rating uplift is no longer warranted, given the UK government’s medium-term plan to gradually exit the RBS ownership.

With RBS expected to complete the necessary changes to implement UK ring-fencing requirements in the coming months, Scope also assigned a first-time Issuer Rating of A to NatWest Holdings Limited, the recently created ring-fenced bank intermediate holding company containing the group’s core retail and commercial banking businesses. Meanwhile, the Issuer Rating of A- on NatWest Markets PLC (formerly The Royal Bank of Scotland PLC) was affirmed.

RBS Group’s ratings reflect its strong franchises in UK retail and commercial banking. These core businesses have demonstrated resilience throughout the group’s restructuring and provide a solid basis for future earnings. Management has successfully re-focused the group and several major legacy issues have been addressed, reducing uncertainty about the group’s financial soundness. Further, prudential metrics are at reassuring levels. As a largely domestic bank with over 90% of loan exposure to the UK, Scope cautiously regards the still unknown consequences of the UK’s exit from the EU.

Download the report on RBS Group here.