Fitch: Costs of RBS restructure outweigh benefits

RBS building

Royal Bank of Scotland is unlikely to face a breakup as the costs would outweigh the benefits, Fitch Ratings said.

Bloomberg News reports that, in a statement yesterday, Fitch said: 'It’s difficult to imagine a restructuring being sanctioned that would increase risk for bondholders without also reducing value for shareholders - most obviously the U.K. government.'

Chancellor of the Exchequer George Osborne said on June 19 he’d review whether to break up the bank because it’s still burdened by too many poor assets for the government to start cutting its 81% stake.

The government would risk falling foul of European Union state aid rules and diluting its stake in the lender in a split, according to Fitch. The Treasury would also have to include the bad bank’s assets in government debt figures, adding to public borrowing, Fitch said.

RBS’s 'solid' half-year earnings and the increased robustness of its balance sheet are likely to reduce the benefit of such a split, Fitch said, adding that it was leaving its A rating on the bank’s senior unsecured debt unchanged.

To access the complete Bloomberg article hit the link below

RBS Breakup Unlikely as Costs Outweigh Benefits, Fitch Says

JPMorgan Said to Expect Multiple Fines for Whale Loss

Zurich Insurance Profit Drops on Natural Disaster Losses

image: © Mark Ramsey

JefferiesAnd the Best Place to Work in the global financial markets 2017 is...

Register for Financial Markets News Alerts