Fitch cuts Clydesdale Bank

Fitch Ratings said it downgraded Clydesdale Bank plc’s long-term issuer default ratings to BBB+ from A and short-term issuer default rating to F2 from F1 and removed them from Rating Watch Negative (RWN).

The agency also downgraded Clydesdale Bank's support rating to 5 from 1, removed it from RWN and assigned a support rating floor of No Floor. It assigned the same ratings to the bank's newly created UK-based holding company CYBG plc.

The outlooks are stable.

Fitch also downgraded the long-term issuer default ratings of Clydesdale Bank Investments Ltd. (CYBI, previously NAGE) to BBB+ from A and short-term issuer default rating to F2 from F1 and removed them from RWN. It also downgraded the support rating to 5 from 1.

The outlook is stable.

The agency subsequently withdrawn all of CYBI's ratings as they are no longer relevant to its coverage.

Fitch assigned final ratings to CYBG's issue of Additional Tier 1 and Tier 2 debt.

Fitch said the downgrade of Clydesdale Bank's issuer default ratings follows the Feb. 8 demerger of Clydesdale Bank's parent company, CYBG from its Australian banking parent, National Australia Bank Ltd. (AA-/Stable/F1+). In the agency’s view, the demerger removes the provision of any potential future extraordinary support for Clydesdale and for CYBG (over and above an indemnity covering legacy conduct costs).

The issuer default ratings are therefore now based on the UK group's standalone financial profile, as defined by its viability rating.

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