The ratings agency said it expects the state-backed lender to remain in its current form under the leadership of the new CEO.
“A bad bank split is unlikely as we believe the costs, obstacles and uncertainties involved in transferring some assets to a state-run bad bank would exceed the benefits, in particular to the UK government as majority shareholder in the bank and potential acquirer of assets.”
Fitch added any move to break up RBS into a ‘good’ and ‘bad’ bank could be problematic for bondholders.
“It is difficult to imagine a restructuring being sanctioned that would increase risk for bondholders without also reducing value for shareholders, most obviously the UK government, one of whose very objectives is to create shareholder value for reprivatisation,” it said.
RBS’ half-year results, released at the start of August, showed the bank returned to the black with a pre-tax profit of £1.4bn, a strengthened its capital ratio. This strengthens the case for leaving the business in tact, according to Fitch.
RBS also appointed Ross McEwan to take over from outgoing CEO Stephen Hester. One of his main tasks will be to steer the 81% state owned lender on the path to reprivatisation.
The Treasury has appointed investment bank Rothschild and advisers from BlackRock to determine whether it makes sense to create a bad bank for RBS’ toxic assets. A final report is due within the next couple of months.
