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Fitch downgrades RBS, raises Lloyds ratings

Fitch downgrades RBS, raises Lloyds ratings

(21 May 2015 – United Kingdom)  Fitch Ratings Agency has lowered Royal Bank of Scotland (RBS)’s rating by two notches from “A” to “BBB+”

Fitch said the bank’s profits were under significant pressure, added to this is the lower government support for financial institutions.

Under new rules, creditors will have to bail out banks if they fail, rather than the state.

RBS has not made a profit since it was bailed out by taxpayers in 2008, it still remains 80 percent taxpayer owned.

Fitch warned about pressure from high restructuring costs, the impact of misconduct fines, including including a mortgage-backed security (RMBS) settlement expected this year that could cost the bank up to US$10 billion (A$12.6 billion).

Lloyds Bank plc had its rating upgraded by Fitch from “A” to “A+”, with the agency citing the bank’s improved financial strength.

"The group's funding profile and liquidity remain healthy. Operating profitability has risen on the back of higher margins and low impairment charges," Fitch said

Meanwhile HSBC’s rating was kept at “AA-“ and Barclays’ was kept at “A”, with all the ratings classed as stable, and unlikely to change anytime soon.

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