Summary: CYBG PLC

CYBG's 'bbb' UGCP is below that of the six largest U.K.-focused financial institutions, mainly reflecting its smaller and less diverse franchise but also its long period of restructuring and its unproven ability to demonstrate strong earnings. In addition, we don't view CYBG's capitalization or risk profile as stand-out credit strengths. That said, we do view CYBG's balance sheet profile as solid, underpinned by the generally low-risk characteristics of U.K. residential mortgages. We do see potential for CYBG to improve statutory returns as a result of the enhanced U.K. retail banking franchise that the Virgin Money transaction affords. However, net interest margins appear likely to remain under downward pressure, mainly due to the competitive U.K. residential market. Strong progress on cost

...CYBG's '###' UGCP is below that of the six largest U.K.-focused financial institutions, mainly reflecting its smaller and less diverse franchise but also its long period of restructuring and its unproven ability to demonstrate strong earnings. In addition, we don't view CYBG's capitalization or risk profile as stand-out credit strengths. That said, we do view CYBG's balance sheet profile as solid, underpinned by the generally low-risk characteristics of U.K. residential mortgages. We do see potential for CYBG to improve statutory returns as a result of the enhanced U.K. retail banking franchise that the Virgin Money transaction affords. However, net interest margins appear likely to remain under downward pressure, mainly due to the competitive U.K. residential market. Strong progress on cost controls will therefore be important to future earnings performance. The long-term rating on Clydesdale Bank PLC incorporates one notch of uplift based on the ALAC arising from the group's subordinated...

Summary