RBS’s triple A rating removed by Moody’s
June 28, 2008
Royal Bank of Scotland has been stripped of their triple A credit rating by Moody’s Investment Service. They also warned that the bank will possibly face more volatile earnings, a weaker economy and the possibility of more writedowns.
Moody’s said the outlook was stable but downgraded RBS one level to Aa1. The downgrade followed a review of the bank which has been taking place since April when RBS announced write downs totaling £5.9bn.
Moody’s also cut the banks financial strength rating from B+ to B.
The ratings agency said “RBS still has large credit exposures to manage down and Moody’s considers it possible the bank could experience further writedowns given continuing difficult market conditions for structured assets.”
They added “In addition, as a leading retail and commercial bank in the UK RBS is expose to the worsening economic outlook for the UK.”
Moody’s also said that the acquisitions of Ditch bank ABN Amro by RBS would tax management “more than initially expected” but initially the bank had shown it could achieve revenue and cost cutting targets.
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