Lloyds Banking Group High-Trigger Additional Tier 1 Hybrid Issuance Rating Affirmed At 'BB-'

LONDON (S&P Global Ratings) March 9, 2018--S&P Global Ratings today said that it affirmed its 'BB-' ratings on the high-trigger additional tier 1 (AT1) capital instruments issued by Lloyds Banking Group PLC. The review followed Lloyds' announcement on Feb. 21, 2018, that it had revised its capital policy and now targets a Common Equity Tier 1 (CET1) ratio of "around 13% plus a management buffer of around 1%" (on a fully loaded basis). Previously, its target was "around 13%." Although the revision indicates an incremental strengthening of Lloyds' already-strong regulatory capitalization, we would only upgrade these AT1 instruments if we had high confidence that Lloyds will consistently maintain CET1 above 14%--that is, at least 700 basis points (bps) above the

...LONDON (S&P Global Ratings) March 9, 2018--S&P Global Ratings today said that it affirmed its '##-' ratings on the high-trigger additional tier 1 (AT1) capital instruments issued by Lloyds Banking Group PLC. The review followed Lloyds' announcement on Feb. 21, 2018, that it had revised its capital policy and now targets a Common Equity Tier 1 (CET1) ratio of "around 13% plus a management buffer of around 1%" (on a fully loaded basis). Previously, its target was "around 13%." Although the revision indicates an incremental strengthening of Lloyds' already-strong regulatory capitalization, we would only upgrade these AT1 instruments if we had high confidence that Lloyds will consistently maintain CET1 above 14%--that is, at least 700 basis points (bps) above the 7% conversion trigger. Lloyds adjusted its capital policy in light of the third-quarter 2017 rise in its Pillar 2 requirement (P2A) to 3.0% from 2.5% and the further rise in the countercyclical buffer on U.K. exposures that the Bank...

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