The ratings on Royal Bank of Scotland Group PLC (RBSG), the ultimate holding company of Royal Bank of Scotland PLC (Royal Bank; AA-/Positive/A-1+) and National Westminster Bank PLC (NatWest; AA-/Positive/A-1+), reflect the group's strong franchise, diversified product and client structure, good asset quality, superior profitability, and the success of management's acquisitional and organic growth strategy. The centerpiece of this strategy was the 2000 acquisition of NatWest. Given that--prior to the acquisition--NatWest was about twice the size of Royal Bank, the latter's status and franchise have been transformed, and the combined bank enjoys a dominant position in a number of U.K. personal, commercial, and wholesale markets. With increased size, the bank has become increasingly diversified, both in the U.K. and overseas.
