Bulletin: RBS Group's Balance Sheet Can Cope With Share Buyback Plan

LONDON (S&P Global Ratings) Feb. 7, 2019--Yesterday, the shareholders of The Royal Bank of Scotland Group plc (RBSG; BBB-/Positive/A-3) approved the bank's repurchase of shares from the U.K. government. We expected this development, since RBSG settled its largest litigation case and passed the Bank of England's stress test during 2018. The bank reported a common equity Tier 1 ratio of 16.7% as of Sept. 30, 2018, comfortably above management's target of at least 13%. The maximum possible buyback in the coming year would lower this ratio by about 70 basis points. For our ratings on RBSG, we assume the risk-adjusted capital ratio will moderate to 9.75%-10.25% at year-end 2020. Coupled with RBSG's recent resumption of dividend payments, the planned share

...LONDON (S&P Global Ratings) Feb. 7, 2019--Yesterday, the shareholders of The Royal Bank of Scotland Group plc (RBSG; ###-/Positive/A-3) approved the bank's repurchase of shares from the U.K. government. We expected this development, since RBSG settled its largest litigation case and passed the Bank of England's stress test during 2018. The bank reported a common equity Tier 1 ratio of 16.7% as of Sept. 30, 2018, comfortably above management's target of at least 13%. The maximum possible buyback in the coming year would lower this ratio by about 70 basis points. For our ratings on RBSG, we assume the risk-adjusted capital ratio will moderate to 9.75%-10.25% at year-end 2020. Coupled with RBSG's recent resumption of dividend payments, the planned share buyback illustrates the group's strengthened balance sheet and reduced tail risks, in our view. As a result, our ratings on RBSG are unchanged. The share repurchase plan, which is subject to government and regulatory approvals, allows RBSG...

Bulletin