Moody's Slashes RBS Rating Reveals Anticipation Of More Losses

It has been disclosed by the bank on Monday that Moody's Investors Service slashes its ratings on Royal Bank of Scotland and states it expects more large losses on top of the 28 billion pounds.

The projected 2008 loss was the largest in British corporate history, strike European banking shares on Monday and sent RBS shares drop 67 percent.

According to Moody's, RBS struggles with more difficulty because of unsecured loans UK to lower-rated companies, exposure to deteriorating commercial property markets in Ireland and the United Kingdom, and real estate and consumer lending in the United States.

He added that the requirements to build large loan loss reserves will constantly putting RBS's profits and capital under severe stress.

According to Moody's, exposures to lower-quality companies, like LyondellBasell, have enhanced considerably due to RBS's acquisition of ABN Amro.

Moody's slashes Royal Bank of Scotland Plc's senior unsecured loans UK rating by two notches to "Aa3," the fourth-highest investment grade, from "Aa1." The outlook is negative, which means that another rating downgrade probably over the long term.

It slashes RBS's bank monetary strength rating to "C-minus" from "B" and said it may slash it again.

It also slashes the senior debt rating of the holding company, Royal Bank of Scotland Group, by two notches to "A1," the fourth highest investment grade, from "Aa2."

"Moody's thinks that over the longer term RBS possibly to remain one of the largest retail and commercial banks in the UK, albeit likely with a condensed international presence," the rating agency pointed out.

Moody's stated that the constant assistance from the "Aaa-rated" UK government is highly likely, but there is still sufficient doubt about RBS's long-term strategy and systemic significance to warrant a negative attitude on its ratings.

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