RAM Ratings reaffirms The Royal Bank of Scotland Berhad’s AA2/P1 ratings

Published on 06 December 2012

RAM Ratings has reaffirmed The Royal Bank of Scotland Berhad’s (“RBS Berhad” or “the Bank”) long- and short-term financial institution ratings at AA2 and P1, respectively. Concurrently, we have reaffirmed the AA3 rating of the Bank’s RM200 million Subordinated Negotiable Instruments of Deposit. Both long-term ratings have a stable outlook. The 1-notch difference between the long-term ratings reflects the subordination of the debt instrument to the claims of the Bank’s senior creditors.

RBS Berhad is a wholly owned subsidiary of The Royal Bank of Scotland Group plc (“RBS Group” or “the Group”) and leverages on its parent’s global network, risk management framework and technical expertise. The Bank operates as a component of the RBS Group’s wholesale-banking network in the Asia-Pacific, and together with RBS Asia Advisers (Malaysia) Sdn Bhd (“RBS Asia Advisers”) as well as the Group’s Labuan branch, form the Group’s presence in Malaysia. RBS Berhad’s strategies are closely aligned with its parent’s. In January 2012, the Group announced its exit globally from the cash equities, corporate broking, equity capital market, as well as mergers and acquisitions businesses. While the exited ventures were mainly served locally through RBS Berhad’s sister company – RBS Asia Advisers – the Bank’s business could be indirectly affected, in our view, by the Group’s narrower suite of products and services. Nonetheless, underpinned by the Group’s emphasis on its remaining core businesses, commitment from the RBS Group to the Bank is expected to remain firm.

  

RBS Berhad’s profit performance would stay volatile, in our view, given its nature of its business that is susceptible to the vagaries of the financial markets. On a positive note, the Bank has maintained its ample liquidity vis-à-vis meeting its short-term obligations. In addition, RBS Berhad’s capitalisation levels are also deemed as robust, with its tier-1 and overall risk-weighted capital-adequacy ratios coming in at a respective 12.9% and 17.5% as at end-June 2012.

Media contact

Peter Kong

(603) 7628 1029

peterkong@ram.com.my