Research Update: Virgin Money Affirmed At 'BBB-/A-3' On Strategic Progress; Clydesdale Outlook Revised To Positive On Bail-In Buffer

Virgin Money UK PLC (Virgin Money; the non-operating holding company or NOHC) has made substantial progress in raising additional loss-absorbing capacity (ALAC) buffers, which provide protection to senior creditors in a resolution scenario. Continued issuance of bail-in instruments could create upward pressure on the rating of the operating company Clydesdale Bank PLC (Clydesdale) if the ALAC ratio were to sustainably exceed 8% of S&P Global Ratings' risk-weighted assets (RWAs), a scenario which looks increasingly possible in the next 12 months. We are therefore revising our outlook on Clydesdale to positive from stable, and affirming our 'BBB+/A-2' long- and short-term issuer credit ratings. We are also affirming our 'BBB-/A-3' long- and short-term issuer credit ratings on Virgin Money. The stable outlook

...- Virgin Money UK PLC (Virgin Money; the non-operating holding company or NOHC) has made substantial progress in raising additional loss-absorbing capacity (ALAC) buffers, which provide protection to senior creditors in a resolution scenario. - Continued issuance of bail-in instruments could create upward pressure on the rating of the operating company Clydesdale Bank PLC (Clydesdale) if the ALAC ratio were to sustainably exceed 8% of S&P Global Ratings' risk-weighted assets (RWAs), a scenario which looks increasingly possible in the next 12 months. - We are therefore revising our outlook on Clydesdale to positive from stable, and affirming our '###+/A-2' long- and short-term issuer credit ratings. - We are also affirming our '###-/A-3' long- and short-term issuer credit ratings on Virgin Money. - The stable outlook on Virgin Money balances the early progress in bank integration and strategic direction, as well as the latent execution risk in delivering sustainably higher statutory returns....

Research Update