various u.k. bank outlooks revised due to potential ......various u.k. bank outlooks revised due to...

Various U.K. Bank Outlooks Revised Due ToPotential Economic Deterioration Following BrexitVote

Primary Credit Analysts:

Osman Sattar, FCA, London 020 71767198; [email protected]

Richard Barnes, London (44) 20-7176-7227; [email protected]

Secondary Contacts:

Alexandre Birry, London (44) 20-7176-7108; [email protected]

Giles Edwards, London (44) 20-7176-7014; [email protected]

Dhruv Roy, London (44) 20-7176-6709; [email protected]

Sadat Preteni, London (44) 20-7176-7560; [email protected]

• In our view, the "leave" result in the U.K.'s June 2016 referendum on EUmembership ("Brexit") has increased the risks of adverse economicdevelopments in the U.K. As a result, we now see a negative trend forU.K. banking industry economic risk.

• We also believe that the U.K. economy has now entered into a correctionphase, driven by our revised expectation that imbalances will worsen ascredit growth slows and real house prices contract. However, we considerthat banks' underwriting standards, low interest rates, and lowunemployment should mitigate the extent of losses in the banking sector.

• We are therefore revising to negative from stable our outlook on themajority of U.K. domestic banks, as described below, while affirmingtheir ratings.

LONDON (S&P Global Ratings) July 7, 2016--S&P Global Ratings said today thatit has taken various rating actions on U.K. banks to reflect rising economicrisks for the U.K. domestic banking industry (for full list, see Ratings Listbelow).• We revised to negative from stable the outlooks on Barclays PLC andBarclays Bank PLC (including its core subsidiaries), CYBG PLC and itssubsidiary Clydesdale Bank PLC, HSBC Holdings PLC and certain of itsrated subsidiaries, Lloyds Banking Group PLC and its rated bank

WWW.STANDARDANDPOORS.COM/RATINGSDIRECT JULY 7, 2016 1

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subsidiaries, Santander UK PLC, and Nationwide Building Society. Weaffirmed the long- and short-term counterparty credit ratings on theseinstitutions. The outlook revisions reflect our view that we could lowerthe ratings on these institutions if we see a materialization of theeconomic risks described below.

• We affirmed the long- and short-term counterparty credit ratings onSantander UK Group Holdings PLC (the nonoperating holding company [NOHC]of Santander UK PLC), and maintained the stable outlook. This reflectsour view that parental support from Banco Santander would likely offset adecline in Santander UK PLC's intrinsic creditworthiness.

• We revised to stable from positive our outlook on U.K.-based NOHC TheRoyal Bank of Scotland Group PLC (RBSG). We also revised to stable frompositive our outlook on the main operating entity of the RBS group, TheRoyal Bank of Scotland PLC (RBS). We affirmed the long- and short-termcounterparty credit ratings on both RBSG and RBS. The stable outlooksreflect our view that RBSG's strong capital position will likely offsetany materialization of the economic risks we see for the U.K. bankingindustry.

• We affirmed the long- and short-term counterparty credit ratings onStandard Chartered PLC and its rated bank subsidiaries. The outlook onthe group's rated banking subsidiaries remains positive, and that on theholding company remains stable. This reflects our view of StandardChartered's limited exposure to the U.K. economy.

• We affirmed the short-term counterparty credit rating on Bradford &Bingley PLC.

ECONOMIC RISKS FOR THE U.K. BANKING INDUSTRYAs a result of the growing risk of adverse economic developments and economicuncertainty arising from the recent Brexit vote, we have revised our view ofthe trend for economic risk in the U.K. banking sector to negative frompositive. The negative trend signifies that we see at least a one-in-threelikelihood that the economic risk assessment may worsen over the next twoyears. We believe that the U.K. economy is now entering a correction phase. Wehave revised our view based on the outcome of the Brexit vote, which we expectwill reduce consumer confidence and the demand for credit in the near term. Inturn, we believe that this, and the potential reduced demand for U.K. propertyfrom overseas buyers, will affect house prices. Nevertheless, we do not expectsignificant losses in the housing sector given the much-improved underwritingstandards since the financial crisis, the still low--and declining--interestrates, and low unemployment.

In our opinion, the outcome of the Brexit vote is a seminal event, and willlead to a less predictable, stable, and effective economic policy framework inthe U.K. The Brexit result could lead to a deterioration of the U.K.'seconomic performance, including its large financial services sector, which isa major contributor to employment and public receipts. As such, we recognizethat there is a high degree of uncertainty in the near term. In particular, itis not clear if the U.K. will retain access to the EU single market--thedestination of 44% of its exports--on existing terms. Future arrangementsregarding the export of services, including by the U.K.'s important financial


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Various U.K. Bank Outlooks Revised Due To Potential Economic Deterioration Following Brexit Vote

services industry, are equally uncertain, in our view.

We believe that U.K. banks' strengthened capital, liquidity, and fundingprofiles provide considerable flexibility to manage an extended period ofeconomic and market uncertainty. We are therefore affirming the ratings on thebanks. Nevertheless, heightened political and economic risks will likelycreate more challenging operating conditions for banks, which are by natureconfidence—sensitive institutions. In particular, we believe this willconstrain earnings in several ways:• Credit growth will likely be more subdued. We believe there is now anincreasing risk of a house price correction arising from the uncertaintygenerated by Brexit. In our view, households' high share of propertyassets increases the sensitivity of consumer demand to housing prices.

• Capital markets revenues will likely fall as corporate activity, such asmergers or acquisitions, declines.

• Pressure on net interest margins could increase if, as appears likely,the Bank of England loosens its monetary policy further, and U.K. banks'credit spreads remain higher than before Brexit. Asset repricing couldabsorb some of this effect, however.

• Credit losses will likely increase, albeit from a very low base, giventhat possible declines in collateral values and a higher level ofcustomer defaults would lead to additional provisioning needs.

Under our current base-case scenario, we expect industry credit losses willrise from the low of 14 basis points (bps) that we saw in 2015, to above 30bps in 2016 and 45 bps in 2017. Although increasing--and higher than ourforecast in April 2016--this level of losses remains far lower than thelong-run average of 69 bps, and lower than the 100+ bps experienced during theglobal financial crisis (see "Low Credit Losses For Even Longer: The SilverLining For U.K. Banks," published April 5, 2016). This is because we believethat underwriting has been more disciplined, and pockets of higher risklending, such as commercial real estate, are smaller than before the financialcrisis. Ongoing low interest rates are also supporting borrowers' debtrepayment capacity.

We will also monitor how funding conditions evolve for U.K. banks, both interms of the availability and cost of wholesale funding. We note that U.K.banks accelerated funding activity and bolstered liquidity buffers before thereferendum to mitigate potential market volatility. The Bank of England hasalso made sterling and foreign currency liquidity available throughcollateralized repo (repurchase agreement) operations. We have detected nounusual funding flows since the referendum and indeed one U.K. bank hasalready recommenced public debt issuance following the Brexit vote. Still, weare alert to the potential impact of economic and political uncertainty onmarket access and pricing. Several U.K. banks have sizable gross TLAC/MRELissuance requirements for the coming years and we would revisit our ALACforecasts if they were to fall behind schedule in building these buffers(ALAC--additional loss-absorbing capacity; TLAC--total loss-absorbingcapacity; MREL--minimum requirement for own funds and eligible liabilities).


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Our view of economic risk in the U.K. could weaken--potentially leading to adownward revision in our economic risk score to '5' from '4'--if:• A significant correction in asset prices becomes increasingly likely,with credit losses jumping to levels well above the 69 bp long-termaverage, and closer to levels seen during the global financial crisis; or

• Factors such as another referendum in Scotland leading to Scottishindependence, or sterling's loss of status as a reserve currency, resultin significant further institutional, financial, and economic uncertainty.

On the other hand, if we assess that uncertainty has reduced and any economicdeterioration is likely to be contained (with manageable credit losses), wecould revise the economic risk trend to stable.

We have also reviewed the stand-alone credit profile (SACP) factors for eachU.K. bank to assess whether there are elements that may mitigate the effectson overall bank creditworthiness of the less supportive economic environmentthat we reflect in our Banking Industry Country Risk Assessment (BICRA) forthe U.K. Some U.K. banks are clearly much more dependent on the U.K. economy,sterling revenues, interest income, and current passporting arrangements thanothers. Nevertheless, in our view, the risks that prompted our revision of theeconomic risk trend to negative are relevant for all U.K. banks with materialdomestic operations, which has resulted in widespread outlook revisions.

The following paragraphs provide more detail behind our rating actions on eachbank.

BARCLAYS PLCThe negative outlook on Barclays reflects the risk of a weaker operatingenvironment following the U.K.'s decision to leave the EU. Specifically, wecould revise down the anchor for U.K. banks to 'bbb' from 'bbb+' over the nexttwo years if prolonged uncertainty following the referendum weakens themacroeconomic outlook and economic resilience of the U.K. economy. With allothers factors remaining the same, this would result in a one-notch downgradeof Barclays PLC (the NOHC) and Barclays Bank PLC (and its core subsidiaries).

Although we recognize that the reasonable geographic diversification of thegroup's revenue streams could help cushion the effects of any macroeconomicdeterioration in the U.K., the negative outlook reflects our view that thepending elements of the group's restructuring (such as the disposal ofnon-core assets) could become more challenging than hitherto. It will alsolikely delay the group's return to a more stable and predictable earningsprofile. The negative outlook incorporates our pre-existing view that thefuture build-up of additional ALAC buffers could in part mitigate any creditnegative implications for Barclays Bank PLC as the non-ring-fenced legalentity within the wider Barclays group (see "Barclays Bank 'A-/A-2' RatingsAffirmed On Strategic Announcements And Ring-Fencing Plans; Outlook Stable,"published March 7, 2016). It also reflects our expectation that groupcapitalization, as measured by our risk-adjusted capital (RAC) ratio, willremain comfortably in the adequate range despite the drag of exceptional itemsrelated to litigation and restructuring.


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We could revise the outlook back to stable if we perceive that themacroeconomic effects of the "leave" vote are contained and prospects for thegroup's strategy and earnings (including the continued rundown of non-coreassets) have become more predictable.

BRADFORD & BINGLEY PLCThe affirmation of the 'A-1' short-term rating on U.K.-incorporated Bradford &Bingley PLC (B&B) reflects S&P Global Ratings' continued view that the U.K.government's 100% ownership supports its creditworthiness. Importantly, thisincludes funding and liquidity support, which, in our view, essentiallyremoves funding risks and ensures that unsecured third-party obligations willbe repaid when due. Moreover, we expect that a timely response from the U.K.government will mitigate any unforeseen volatility relating to B&B's work-outefforts. As such, our assessment of implicit state support compensates anyintrinsic business model weaknesses arising from B&B being a run-off-entity.

CLYDESDALE BANK PLC AND CYBG PLCThe negative outlook on Clydesdale Bank reflects the risk of a weakeroperating environment following the U.K.'s decision to leave the EU.Specifically, we could revise down the anchor for U.K. banks to 'bbb' from'bbb+' over the next two years if prolonged uncertainty following thereferendum weakens the macroeconomic outlook and economic resilience of theU.K. economy. This could, for example, manifest itself through a sharpcorrection in asset prices and rising systemwide credit losses. With allothers factors remaining the same, this would result in a one-notch downgradeof Clydesdale.

We could also lower the rating on Clydesdale if we observed that the bank'soperating performance and risk appetite deviated materially from currentmanagement expectations; there were potential conduct issues not covered bythe mitigation package with former parent National Australia Bank (NAB), whichweighed on profitability; or risks relating to the operational separation fromNAB were not being managed adequately.

An upgrade is not likely at this stage.

The negative outlook on CYBG mirrors that on Clydesdale.

HSBC HOLDINGS PLCWe revised the outlook on group NOHC HSBC Holdings PLC, and certain Europeanand North American subsidiaries, to negative from stable. These subsidiariesinclude HSBC Bank PLC, HSBC France, HSBC USA Inc., HSBC Bank USA N.A., andHSBC Bank Canada (see Ratings List for full details). The stable outlook onThe Hongkong and Shanghai Banking Corp. Ltd. (HBAP) and the outlooks on itssubsidiaries across Asia-Pacific remain unchanged. This is because potentialextraordinary support from the Hong Kong government would maintain thelong-term rating on HBAP at 'AA-' if we were to downgrade HSBC Holdings by onenotch.


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The negative outlook reflects potential pressures over our two-year ratinghorizon arising from the U.K.'s vote to leave the EU and China's economicslowdown. Although HSBC's highly diversified business profile andstrengthening capitalization are significant mitigants, we neverthelessidentify risks to asset quality and revenues that may challenge the currentratings. In particular, we expect uncertainty over whether the U.K.'s futurerelationship with the EU will hinder the U.K. economy. China's economicslowdown appears to have had little impact to date on HSBC's risk profile, butwe remain alert to signs of credit deterioration in its material exposureacross the Asia-Pacific region. Increased market uncertainty could alsoprevent HSBC from achieving its strategic priorities. The negative outlookalso takes account of other factors--the prolonged period of low globalinterest rates, HSBC's ongoing U.S. deferred prosecution agreement, and itsoutstanding litigation cases.

We could lower the ratings if we consider that economic conditions andprospects in HSBC's major markets are no longer supportive of the currentratings. This could lead us to revise down our risk position assessment toadequate from strong or, less probably, revise down the anchor to 'bbb' from'bbb+'. We could also reassess our current business position assessment ifHSBC falls behind schedule on the implementation of its strategic plan,potentially leading to a deeper restructuring of its business model.

We could revise the outlook to stable if HSBC demonstrates resilient assetquality metrics and capital generation. An improvement in the RAC ratiocomfortably and sustainably above our 10% threshold would also support astable outlook. We would additionally look for confirmation that HSBC ismaking good progress toward its strategic targets and that it will continue tobuild ALAC-eligible instruments in line with its issuance guidance for2016-2018.

LLOYDS BANKING GROUP PLCThe negative outlook reflects the negative trend we see for economic risk inthe U.K. and our view that Lloyds' creditworthiness could weaken if itsoperating environment weakens. Nevertheless, our ratings reflect our view thatLloyds' statutory profitability will further improve through end-2018, that itwill maintain an S&P Global Ratings RAC ratio of about 8.0%-8.5%, asset growthwill be moderate with no significant step-up in risk appetite, and it willcontinue to gradually build its buffer of ALAC to about 6%.

We could lower the ratings on Lloyds or its subsidiaries if we revised downthe unsupported group credit profile (GCP), currently 'a-'. This would mostlikely follow a weakening in our economic risk assessment for the U.K. Whileless likely, we could also revise down the unsupported GCP if, for example,Lloyds exhibited a substantial increase in risk appetite that could affect itsfuture asset quality or exposure to conduct risk. Finally, we could lower theratings on the group's operating companies if Lloyds' ALAC buffer fell belowour 4.5% threshold and looked likely to remain there.


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We would most likely revise the outlook to stable if we considered that risksto the U.K. economy were reducing. While less likely, this could also occur ifLloyds very substantially builds its core capitalization beyond our currentexpectations. Similarly, if we see a strong possibility that Lloyds will buildits ALAC buffer beyond 8%, we could revise to stable the outlook on coreoperating subsidiaries Lloyds Bank PLC and Bank of Scotland PLC, though weconsider this an unlikely scenario at present.

NATIONWIDE BUILDING SOCIETYThe negative outlook on Nationwide Building Society reflects the risk of aweaker operating environment following the U.K.'s decision to leave the EU.Specifically, we could revise down the anchor for U.K. banks to 'bbb' from'bbb+' over the next two years if prolonged uncertainty following thereferendum weakens the macroeconomic outlook and economic resilience of theU.K. economy. This could, for example, manifest itself through a sharpcorrection in asset prices and rising systemwide credit losses. With allothers factors remaining the same, this would result in a one-notch downgradeof Nationwide.

Our ratings on Nationwide reflect its relatively low risk appetite, strongasset quality, and predictable internal capital generation. That said, thenegative outlook reflects our view that the combination of prolonged lowinterest rates and rising credit losses (albeit from low levels) could lowerthe trajectory of organic capital build through retained earnings, givenNationwide's concentrated exposure to the leveraged U.K. household sector. Wealso note that a lower assessment of economic risk in the U.K. would make itless likely that Nationwide's RAC ratio would exceed 10% over our two-yearoutlook horizon.

We could revise the outlook back to stable if we perceive that themacroeconomic effects of the "leave" vote are contained and that marginpressures and credit losses will not encumber our favorable view of thepredictability of Nationwide's earnings profile relative to U.K. bankingindustry peers.

THE ROYAL BANK OF SCOTLAND GROUP PLCThe stable outlook on The Royal Bank of Scotland Group PLC (RBSG) and its mainsubsidiaries balances a potential increase in the economic risks that U.K.banks face--on the back of the outcome of the EU referendum--against thegroup's improved capitalization and progress with its restructuring.

We could lower the ratings on NOHC RBSG in the next 18-24 months if a materialincrease in economic risks were to lead us to revise down the starting pointfor our ratings on U.K. banks (the anchor), and if an improved assessment ofcapital and earnings did not offset this. This could occur, for instance, ifone-off charges--including those related to conduct and litigation--preventedthe prospective RAC ratio from sustainably exceeding 10%, and if increasedeconomic risks or additional restructuring requirements were to further delaythe group's return to statutory profitability. We also note that any futurereorganization of the group to comply with U.K. ring-fencing regulations could


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change the creditworthiness of the group or individual group entities.

We could raise the ratings if the outcome of the referendum doesn't lead to amaterial increase in systemwide risks, and if we believe that RBS' RAC ratiowill remain sustainably above our 10% threshold for a higher capital andearnings assessment--even allowing for probable large conduct and litigationcharges during 2016 and the possible return to shareholder distributions atthe outer edges of our two-year outlook horizon. For the operatingsubsidiaries of the group, this is also based on the assumption that RBS' ALACbuffer will not fall materially below our projections, even though the"excess" total adjusted capital (TAC) element of the ALAC would fall awayunder a higher capital assessment.

The outlook on the main operating subsidiaries of RBSG mirrors that on RBSG.It also incorporates our expectation that the bank will maintain an ALACbuffer in excess of 8.5%. At this time, we don't expect to remove theone-notch negative adjustment that we incorporate in the issuer credit rating.This adjustment reflects our expectation that RBS will remain a relativeunderperformer in terms of statutory profits in 2016 compared with similarlyrated peers and our view of its operating performance as less predictable thanthat of peers.

SANTANDER UK GROUP HOLDINGS PLCThe stable outlook on Santander UK Group Holdings (the "U.K. NOHC") reflectsour view that the potential for support from the higher rated parent, BancoSantander, to the Santander UK (SanUK) group would maintain the ratings on theU.K. NOHC at their current level even if we were to revise down our assessmentof Santander UK's intrinsic creditworthiness. This takes into considerationBanco Santander's unsupported GCP of 'a-', and the fact that we don't includeany ALAC support in the 'BBB' rating on the U.K. NOHC.

We could raise our ratings on Santander UK Group Holdings if our view of theparent's creditworthiness remains at least stable and if we have greaterconfidence that the parent would, under any circumstances and withoutrestrictions, channel its support through the U.K. NOHC, if needed.

We could lower the rating on Santander UK Group Holdings if we were to revisedown the unsupported GCP on SanUK and lower our ratings on Banco Santander.

SANTANDER UK PLCThe negative outlook on Santander UK PLC ("SanUK") reflects the growing riskof adverse economic developments arising in the next two years following the"leave" vote, which may undermine the U.K.'s economic resilience.

We could lower the ratings on SanUK by one notch if we revised down the anchorfor U.K. banks based on a weaker assessment of the economic risks thatU.K.-focused banks, such as SanUK, face.

Although a more remote risk at this stage, we could also lower the ratings if


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SanUK group's issuance of ALAC-eligible instruments--including NOHC seniordebt--were to fall materially short of our expectations, possibly on the backof a material increase in risk aversion from markets toward U.K. banks. Wecurrently project that most of the ALAC progression to above 8% over the next18 months will stem from senior debt issuance by holding companies.

We could revise the outlook back to stable if we take a more favorable view ofsystemwide risks for domestic U.K. banks.

STANDARD CHARTERED PLC

The stable outlook continues to factor in the difficult operating environmentand work-in-progress nature of management's restructuring efforts to reducerisk concentration. It also reflects our overall view that there are currentlylimited negative or positive pressures on the rating (see "Ratings On StandardChartered Entities Lowered By One Notch; Positive Outlook Reflects ALAC,Restructuring Initiatives," published March 31, 2016). We also see StandardChartered group's exposure to the U.K. economy as fairly limited, and considerthat the Brexit vote is unlikely to have a material effect on the group'soverall credit profile.

Though unlikely in the near term, we could lower the rating if we see afurther weakening in the group's overall credit profile. This could resultfrom events such as: (1) a sharp adverse development in asset quality; (2) asignificant weakening in the group's funding or liquidity profiles; or (3)factors that will require management to undertake a significantly morefar-reaching and substantial restructuring to restore the group'sprofitability.

While a remote possibility at this time, we could raise the long-term ratingif the RAC ratio improves substantially beyond our current 11% projection,leading us to conclude that the group's capitalization provides a substantialbuffer against possible future losses.

The positive outlook on the group's operating subsidiaries mainly reflects ourview that the group's accumulation of ALAC is likely to offer increasedprotection to senior unsecured creditors of the group's operating subsidiariesin the next 12-24 months.

We would likely raise our long-term ratings on operating subsidiaries once thegroup accumulates 8.5% ALAC on a sustainable basis. An upgrade would also needto be supported by a view that a higher rating, especially for key operatingentity Standard Chartered Bank, is justified in comparison with similarlyhighly-rated peers. It would also depend on our ongoing belief that regulatorsand resolution authorities would seek to ensure that these entities' seniorunsecured creditors continue to be paid on time and in full if the groupfails.

We would likely revise the outlook back to stable if the group's accumulationof ALAC seems set to be delayed or fall short. This revision could also result


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from reduced confidence that a higher rating is justified in comparison withsimilarly highly-rated peers, for example due to mounting downside risks ofthe type envisaged under the downside scenario mentioned above for StandardChartered PLC.

BICRA SCORE SNAPSHOT*

U.K. To From

BICRA Group 3 3

Economic risk 4 4Economic resilience Low risk Very Low riskEconomic imbalances Intermediate risk Intermediate riskCredit risk in the economy High risk High risk

Industry risk 3 3Institutional framework Intermediate risk Intermediate riskCompetitive dynamics Intermediate risk Intermediate riskSystemwide funding Low risk Low risk

TrendsEconomic risk trend Negative PositiveIndustry risk trend Stable Stable

*Banking Industry Country Risk Assessment (BICRA) economic risk and industryrisk scores are on a scale from 1 (lowest risk) to 10 (highest risk). For moredetails on our BICRA scores on banking industries across the globe, please see"Banking Industry Country Risk Assessment Update" published monthly onRatingsDirect.

RATINGS LIST

******************************* Barclays PLC *******************************

Ratings Affirmed; CreditWatch/Outlook ActionTo From

Barclays PLCCounterparty Credit Rating BBB/Negative/A-2 BBB/Stable/A-2

Barclays Bank Ireland PLCBarclays Private Clients International Ltd.Barclays Capital Inc.Barclays Bank plc (Milan Branch)Barclays Bank plc (Madrid Branch)Barclays Bank PLCCounterparty Credit Rating A-/Negative/A-2 A-/Stable/A-2


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Barclays Bank PLC (Taipei Branch)Counterparty Credit RatingTaiwan National Scale twAA/Negative/twA-1+ twAA/Stable/twA-1+

DowngradedTo From

Barclays Bank PLCCounterparty Credit RatingGreater China Regional Scale cnAA-/--/-- cnAA/--/--

Barclays Bank PLCSenior Unsecured cnAA- cnAA

Ratings AffirmedBarclays Bank PLCCertificate Of DepositLocal Currency A-/A-2

Barclays PLCSenior Unsecured BBBSubordinated BB+Junior Subordinated B+

Barclays Bank PLCSenior Unsecured A-Senior Unsecured A-pSenior Unsecured BBB-Subordinated BB+Subordinated BBB-Junior Subordinated BBJunior Subordinated BB+Junior Subordinated BBB-Preference Stock BBShort-Term Debt A-2Certificate Of Deposit A-Certificate Of Deposit A-2Commercial Paper A-2

Barclays Bank PLC (Australian Branch)Barclays Bank PLC (Hong Kong Branch)Barclays Bank PLC (New York Branch)Barclays Bank PLC (Singapore Branch)Barclays Bank PLC (Tokyo Branch)Barclays U.S. Funding Corp.Barclays US Funding LLCCommercial Paper A-2

Barclays Financial LLCSenior Unsecured A-


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************************** Bradford & Bingley PLC **************************

Ratings Affirmed

Bradford & Bingley PLCCounterparty Credit Rating --/--/A-1

*********************** Clydesdale Bank PLC ***********************


Clydesdale Bank PLCCounterparty Credit Rating BBB+/Negative/A-2 BBB+/Stable/A-2

CYBG PLCCounterparty Credit Rating BBB-/Negative/A-3 BBB-/Stable/A-3

Ratings AffirmedClydesdale Bank PLCCommercial Paper A-2

CYBG PLCSubordinated BBJunior Subordinated B

**************************** HSBC Holdings PLC ***************************


HSBC Bank PLCHSBC Securities (USA) Inc.HSBC FranceHSBC Bank USA N.A.HSBC Bank CanadaCounterparty Credit Rating AA-/Negative/A-1+ AA-/Stable/A-1+

HSBC Holdings PLCHSBC USA Inc.HSBC Finance Corp.Counterparty Credit Rating A/Negative/A-1 A/Stable/A-1

Ratings Affirmed

HSBC Bank (Taiwan) Ltd.Counterparty Credit Rating A+/Stable/A-1Greater China Regional Scale cnAAA/--/cnA-1+Taiwan National Scale twAAA/Stable/twA-1+


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HSBC Bank A.S.Counterparty Credit Rating BB/Negative/BTurkey National Scale trAA-/--/trA-1

HSBC Bank Australia Ltd.Counterparty Credit Rating A+/Stable/A-1

HSBC Bank Bermuda Ltd.Counterparty Credit Rating A-/Negative/A-2

HSBC Bank CanadaCertificate Of DepositForeign Currency AA-/A-1+

HSBC FranceCertificate Of DepositForeign Currency AA-Local Currency AA-/A-1+

Hang Seng Bank (China) LimitedCounterparty Credit Rating AA-/Negative/A-1+Greater China Regional Scale cnAAA/--/cnA-1+

Hang Seng Bank LimitedThe Hongkong and Shanghai Banking Corp. Ltd.Counterparty Credit Rating AA-/Stable/A-1+Greater China Regional Scale cnAAA/--/cnA-1+

The Hongkong and Shanghai Banking Corp. Ltd.Certificate Of DepositForeign Currency AA-/A-1+

The Saudi British BankCounterparty Credit Rating BBB+/Stable/A-2

HSBC Bank PLCSenior Unsecured A+Senior Unsecured AA-Senior Unsecured AA-pSubordinated A-Junior Subordinated BBB+Commercial Paper A-1+

HSBC Holdings PLCSenior Unsecured ASubordinated BBB+Junior Subordinated BBB-Preference Stock BBB-


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HSBC Bank (Taiwan) Ltd.Senior Unsecured twAAA

HSBC Bank Australia Ltd.Senior Unsecured A+Subordinated ACommercial Paper A-1

HSBC Bank CanadaSenior Unsecured AA-Subordinated A-Preferred Stock BBBPreferred Stock P-2Short-Term Debt A-1+Certificate Of Deposit A-1+Certificate Of Deposit AA-

HSBC Bank Capital Funding (Sterling 1) L.P.Preferred Stock BBB

HSBC Bank Capital Funding (Sterling 2) L.P.Preferred Stock BBB

HSBC Bank USA N.A.Senior Unsecured AA-Subordinated A

HSBC Capital Funding (Dollar 1) L.P.Preferred Stock BBB-

HSBC Capital Funding (Euro 3) L.P.Preferred Stock BBB-

HSBC Finance Corp.Senior Unsecured ASubordinated A-Preferred Stock BBB-Commercial Paper A-1

HSBC FranceSenior Unsecured AA-Certificate Of Deposit A-1+

HSBC USA Capital Trust IPreferred Stock BBB-

HSBC USA Capital Trust IIPreferred Stock BBB-

HSBC USA Inc.


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Senior Unsecured ASubordinated A-Preferred Stock BBB-Commercial Paper A-1

The Hongkong and Shanghai Banking Corp. Ltd.Senior Unsecured AA-Senior Unsecured cnAAACertificate Of Deposit A-1+

The Hongkong and Shanghai Banking Corp. Ltd. (Sydney Branch)Senior Unsecured AA-

************************* Lloyds Banking Group PLC *************************


Lloyds Banking Group PLCHBOS PLCCounterparty Credit Rating BBB+/Negative/A-2 BBB+/Stable/A-2

Bank of Scotland PLCLloyds Bank PLCCounterparty Credit Rating A/Negative/A-1 A/Stable/A-1

Ratings AffirmedBank of Scotland PLCCertificate Of DepositForeign Currency A/A-1Local Currency A/A-1

Lloyds Bank PLCCertificate Of Deposit A/A-1

Lloyds Banking Group PLCSenior Unsecured BBB+Subordinated BBB-Junior Subordinated BB+Junior Subordinated BB-Preference Stock BB

Bank of Scotland Capital Funding L.P.Preferred Stock BB+

Bank of Scotland PLCSenior Unsecured ASenior Unsecured ApSubordinated BBBJunior Subordinated BB+


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Junior Subordinated BBB-

HBOS Capital Funding L.P.Junior Subordinated BBPreferred Stock BB

HBOS Capital Funding No. 1 L.P.Preference Stock BB

HBOS Capital Funding No. 3 L.P.Preferred Stock BB

HBOS Capital Funding No. 4 L.P.Junior Subordinated BB

HBOS PLCSubordinated BBB-Junior Subordinated BB+

Halifax Group Euro Finance (Jersey) L.P.Preferred Stock BB

Halifax Group Sterling Finance (Jersey) L.P.Preferred Stock BB

LBG Capital No. 1 PLCSubordinated BBB-Junior Subordinated BB+

LBG Capital No. 2 PLCSubordinated BBB

Lloyds Bank Capital 2 L.P.Preferred Stock BB+

Lloyds Bank PLCSenior Unsecured ASenior Unsecured ApSenior Unsecured cnAA+Subordinated BBBJunior Subordinated BB+Junior Subordinated BBB-Certificate Of Deposit A-1Commercial Paper A-1

*********************** Nationwide Building Society **********************

Ratings Affirmed; CreditWatch/Outlook Action


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To FromNationwide Building SocietyCounterparty Credit Rating A/Negative/A-1 A/Stable/A-1

Ratings Affirmed

Nationwide Building SocietySenior Unsecured ASubordinated BBBJunior Subordinated BB+Certificate Of Deposit ACertificate Of Deposit A-1Commercial Paper A-1

Law Debenture Intermediary Corp. PLC (The)Junior Subordinated BB+

*******************Santander UK Group Holdings PLC ***********************


Santander UK PLCCounterparty Credit Rating A/Negative/A-1 A/Stable/A-1

Ratings Affirmed

Santander UK Group Holdings PLCCounterparty Credit Rating BBB/Stable/A-2

Santander UK Group Holdings PLCSenior Unsecured BBBSubordinated BB+Junior Subordinated B+

Abbey National Capital Trust IPreferred Stock BB

Abbey National North America LLCCommercial Paper A-1

Abbey National Treasury Services PLCSenior Unsecured ACertificate Of Deposit A-1Commercial Paper A-1

Abbey National Treasury Services PLC (Hong Kong branch)Certificate Of Deposit A

Santander UK PLC


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Senior Unsecured ASubordinated BBB-Junior Subordinated BBJunior Subordinated BB+Preferred Stock BBPreference Stock BB

************************** Standard Chartered PLC **************************

Ratings Affirmed

Standard Chartered PLCCounterparty Credit Rating BBB+/Stable/A-2

Standard Chartered BankCounterparty Credit Rating A/Positive/A-1

Standard Chartered Bank (China) Ltd.Counterparty Credit Rating A/Positive/A-1Greater China Regional Scale cnAAA/--/cnA-1+

Standard Chartered Bank (Hong Kong) Ltd.Counterparty Credit Rating A+/Positive/A-1Greater China Regional Scale cnAAA/--/cnA-1+

Standard Chartered Bank (Taiwan) Ltd.Counterparty Credit Rating A-/Positive/A-2Greater China Regional Scale cnAA+/--/cnA-1Taiwan National Scale twAA/Positive/twA-1+

Standard Chartered Bank Korea Ltd.Counterparty Credit Rating A-/Positive/A-2

Standard Chartered PLCSenior Unsecured BBB+Subordinated BBB-Junior Subordinated BB-Preference Stock BB

Standard Chartered BankSenior Unsecured ASenior Unsecured ApSenior Unsecured cnAAASubordinated BBBJunior Subordinated BB+Junior Subordinated BBB-Preferred Stock BB+Certificate Of Deposit ACertificate Of Deposit A-1Certificate Of Deposit axA-1+


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Certificate Of Deposit axAAACommercial Paper A-1

Standard Chartered Bank (Hong Kong) Ltd.Senior Unsecured A+Senior Unsecured cnAAASubordinated ASubordinated cnAA+

******************* The Royal Bank of Scotland Group PLC *******************


The Royal Bank of Scotland Group PLCCounterparty Credit Rating BBB-/Stable/A-3 BBB-/Positive/A-3

National Westminster Bank PLCThe Royal Bank of Scotland PLCThe Royal Bank of Scotland N.V.Royal Bank of Scotland PLC (Connecticut Branch) (The)Royal Bank of Scotland N.V. (Milan Branch)RBS Securities Inc.Counterparty Credit Rating BBB+/Stable/A-2 BBB+/Positive/A-2

Ulster Bank Ireland DACUlster Bank Ltd.Counterparty Credit Rating BBB/Stable/A-2 BBB/Positive/A-2

DowngradedTo From

The Royal Bank of Scotland PLCSenior Unsecured cnA+ cnAA-

Ratings AffirmedThe Royal Bank of Scotland N.V.Certificate Of DepositForeign Currency BBB+/A-2

The Royal Bank of Scotland PLCCertificate Of DepositForeign Currency BBB+/A-2Local Currency BBB+/A-2

Ulster Bank Ireland DACCertificate Of Deposit BBB/A-2

The Royal Bank of Scotland Group PLCSenior Unsecured BBB-Subordinated BBJunior Subordinated B


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Junior Subordinated B+Junior Subordinated BB-Preferred Stock B+Preference Stock B+Commercial Paper A-3

National Westminster Bank PLCSubordinated BB+Junior Subordinated BBJunior Subordinated BB-Preference Stock BB-

RBS Capital Funding Trust VPreferred Stock BB-

RBS Capital Funding Trust VIPreferred Stock BB-

RBS Capital Funding Trust VIIPreferred Stock BB-

RBS Capital Trust BPreferred Stock B+

RBS Capital Trust CPreferred Stock B+

RBS Capital Trust DPreferred Stock B+

RBS Capital Trust IIPreferred Stock B+

RBS Holdings USA Inc.Commercial Paper A-2

The Royal Bank of Scotland N.V.Senior Unsecured BBB+Subordinated BB+Certificate Of Deposit A-2Certificate Of Deposit BBB+

The Royal Bank of Scotland PLCSenior Unsecured BBB+Senior Unsecured BBB+pSubordinated BB+Junior Subordinated BBCertificate Of Deposit A-2Commercial Paper A-2


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Ulster Bank Finance PLCCommercial Paper A-2

Ulster Bank Ireland DACCertificate Of Deposit A-2

RELATED CRITERIA AND RESEARCHRelated criteria• Criteria - Financial Institutions - Banks: Bank Hybrid Capital AndNondeferrable Subordinated Debt Methodology And Assumptions - January 29,2015

• General Criteria: Rating Government-Related Entities: Methodology AndAssumptions - March 25, 2015

• General Criteria: Principles For Rating Debt Issues Based On ImputedPromises - December 19, 2014

• General Criteria: S&P Global Ratings' National And Regional Scale MappingTables - June 01, 2016

• General Criteria: Standard & Poor's National And Regional Scale MappingTables - September 30, 2014

• General Criteria: Group Rating Methodology - November 19, 2013• General Criteria: Use Of CreditWatch And Outlooks - September 14, 2009• Criteria - Financial Institutions - Banks: Revised Market Risk ChargesFor Banks In Our Risk-Adjusted Capital Framework - June 22, 2012

• Criteria - Financial Institutions - Banks: Assessing Bank BranchCreditworthiness - October 14, 2013

• Criteria - Financial Institutions - Banks: Bank Rating Methodology AndAssumptions: Additional Loss-Absorbing Capacity - April 27, 2015

• Criteria - Financial Institutions - Banks: Methodology For Mapping Short-And Long-Term Issuer Credit Ratings For Banks - May 04, 2010

• Criteria - Financial Institutions - Banks: Commercial Paper I: Banks -March 23, 2004

• Criteria - Financial Institutions - Banks: Quantitative Metrics ForRating Banks Globally: Methodology And Assumptions - July 17, 2013

• Criteria - Financial Institutions - Banks: Bank Capital Methodology AndAssumptions - December 06, 2010

• Criteria - Financial Institutions - Banks: Banking Industry Country RiskAssessment Methodology And Assumptions - November 09, 2011

• Criteria - Financial Institutions - Banks: Banks: Rating Methodology AndAssumptions - November 09, 2011

• Legal Criteria: Guarantee Criteria—Structured Finance – May 07, 2013

Related research• Ratings On The United Kingdom Lowered To 'AA' On Brexit Vote; OutlookRemains Negative On Continued Uncertainty, 27-Jun-2016

• Major U.K. Banks Are Nearing The End Of The Road For Mega Conduct AndLitigation Charges, 26-Apr-2016

• Low Credit Losses For Even Longer: The Silver Lining For U.K. Banks,05-Apr-2016

• U.K. Banks Face Up To Brexit Uncertainty, 14-Mar-2016


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• U.K. Banks' Proposed Bail-In Buffers And Resolution Paths Largely SupportOur Rating Assumptions, 19-Feb-2016

• U.K. Banks: What's On The Cards For 2016, 20-Jan-2016• U.K. Banks Mostly Untroubled By The Latest Regulatory Stress Test AndAppear Well-Placed For Future Capital Requirements, 01-Dec-2015

• Ratings On U.K. Banks Remain Unaffected By CMA Retail Banking MarketInvestigation, 22-Oct-2015

• How Might Ring-Fencing Move The Dial For U.K. Bank Ratings? 16-Oct-2015• The U.K.'s "Challenger Banks": A Label That Deserves A More NuancedUnderstanding, 08-Sep-2015

• U.K. Banks' Rising Capital Strength Doesn't Necessarily Mean RatingsUpgrades Are Likely, 10-Aug-2015

• Brexit Risk For The U.K. And Its Financial Services Sector: It'sComplicated, 23-Jun-2015

Additional Contact:

Financial Institutions Ratings Europe; [email protected]

Certain terms used in this report, particularly certain adjectives used toexpress our view on rating relevant factors, have specific meanings ascribedto them in our criteria, and should therefore be read in conjunction with suchcriteria. Please see Ratings Criteria at www.standardandpoors.com for furtherinformation. Complete ratings information is available to subscribers ofRatingsDirect at www.globalcreditportal.com and at spcapitaliq.com. Allratings affected by this rating action can be found on the S&P Global Ratingspublic website at www.standardandpoors.com. Use the Ratings search box locatedin the left column. Alternatively, call one of the following S&P GlobalRatings numbers: Client Support Europe (44) 20-7176-7176; London Press Office(44) 20-7176-3605; Paris (33) 1-4420-6708; Frankfurt (49) 69-33-999-225;Stockholm (46) 8-440-5914; or Moscow 7 (495) 783-4009.


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various u.k. bank outlooks revised due to potential ......various u.k. bank outlooks revised due to...

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