Ulster Bank Ireland has won another ratings upgrade to reflect the strength of its parent company, the Royal Bank of Scotland (RBS).
Fitch Ratings upgraded Ulster Bank's long-term issuer default rating to A- from BBB. An issuer default rating assesses a company's vulnerability to default on its financial obligations.
Fitch's upgrade follows the same action of RBS, which achieved an A rating for the same metric.
The ratings agency’s believe is that, were it to need it, there is an “extremely high probability” that Ulster Bank would get support from its parent company.
"We believe that any support required by Ulster Bank Ireland would be manageable for the Royal Bank of Scotland Group, given the subsidiary's size compared with the group's financial profile," Fitch said in its ratings upgrade.
“Royal Bank of Scotland Group has identified Ireland as a strategically important market and we believe that if the group does not provide support if needed, it would cause high reputational risk with potential for a significant impact on other parts” of the bank.
But Fitch didn’t go so far as to give Ulster Bank the same rating as its parent because of the fact they don’t operate in the same country, something that weakens its view of the likelihood of support.
S&P upgrade
Wednesday’s upgrade follows an upgrade from Standard & Poor’s on Tuesday of Ulster Bank’s standalone credit profile - an opinion of the bank’s creditworthiness in the absence of extraordinary intervention from its parent.
However, S&P retained its existing long term issuer rating on Ulster Bank, noting its “positive” outlook.
