RBS Outlook Changed to Negative by S&P Amid ‘New Failings’Donal Griffin
Royal Bank of Scotland Group Plc, the recipient of the world’s biggest banking bailout, had its credit outlook changed to negative from stable by Standard & Poor’s amid “new failings” across the U.K. financial system.
Two smaller lenders also had outlooks downgraded along with London-based RBS, according to a statement from S&P today. The change reflects “our belief that industry risks for U.K. banks have grown relative to other banking systems,” S&P said.
The U.K.’s biggest lenders have been embroiled in regulatory probes since the financial crisis, when British taxpayers bailed out firms including RBS and Lloyds Banking Group Plc. Banks have paid billions of dollars to settle allegations that they rigged interest rates and failed to prevent money-laundering. They’ve also had to compensate customers who were improperly sold payment-protection insurance.
“Over the past two years, new failings have emerged,” S&P said. “While the affected banks are addressing these issues, they indicate to us that the industry still has a high risk appetite and, in some cases, failings have continued after the financial crisis.”
S&P also changed the credit outlooks for Virgin Money Plc and Yorkshire Building Society to negative from stable. While the moves were triggered by the ratings firm’s view of the industry, the negative outlooks do not “reflect deterioration in our assessment of their specific credit factors,” according to the statement.
“S&P has specifically highlighted that this is an industry action and does not reflect a deterioration of RBS’s individual creditworthiness,” Ed Canaday, a spokesman for RBS, said in an e-mailed statement.