Update: NatWest Markets Plc

The negative outlook on NWM mirrors that on NWG and reflects residual risks to asset quality and earnings from the economic impact of the COVID-19 pandemic. We view positively NWG's robust balance sheet profile and the unprecedented fiscal and monetary response, and we expect its impairment charges will decline significantly in 2021. However, there remains uncertainty over the shape of the economic recovery and the implications for asset quality over our two-year outlook horizon as the U.K. government tapers fiscal support measures. Our ratings on NWM will move in tandem with those on NWG as long as we continue to view NWM as a highly strategic subsidiary of the group. We could lower the ratings on NWG and NWM if

...S&P Global Ratings assesses NatWest Markets (NWM) as a highly strategic subsidiary of ultimate parent NatWest Group plc (NWG). This classification takes into account NWM's materiality, important role in the parent's strategy, and close link to the group's brand and reputation. We see NWM as highly strategic rather than core (which is a stronger assessment) because we consider it has a higher risk profile and weaker earnings than NWG's ring-fenced activities. As a result of NWM's highly strategic status, we position the long-term issuer credit rating one notch below the 'a' group credit profile, which includes a two-notch uplift for additional loss-absorbing capacity (ALAC). We do not determine a stand-alone credit profile for NWM. NWM is NWG's primary U.K. non-ring-fenced bank subsidiary. It houses the majority of the group's capital-market activities, which focus on rates, credit, currencies, and financing. NWG has significantly reduced the scale and scope of its capital markets business...

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