LONDON Feb 12 Ratings agency Moody's has placed
Royal Bank of Scotland's credit ratings on review for
downgrade, citing concerns over the part-nationalised lender's
RBS, 81 percent-owned by Britain's government, said in
January it was taking billions of pounds in extra charges to
cover the cost of past misconduct, sending it deep into the red.
Moody's said it would assess whether RBS's current ratings
are appropriate given the risks and challenges in implementing
its recovery plan, pending litigation and regulatory probes, and
any action the bank can take to mitigate those risks.
The move is a blow to new RBS Chief Executive Ross McEwan
who is looking to turn around the fortunes of the bank, which
was the subject of a 45 billion pound ($74 billion) government
rescue in 2008. He wants to speed up the wind-down of the bank's
riskiest assets and sell off its U.S. business Citizens.
"RBS's recent announcement demonstrates that its management
faces a number of short-term headwinds, which could challenge
the implementation of this plan and in turn be negative for its
creditors," Moody's said in a statement on Wednesday.
RBS has set aside 3.1 billion pounds more to deal with past
issues, including 1.9 billion to deal with claims relating to
possible mis-selling of U.S. home loans.
The bank said in January it expected to report a core Tier I
ratio - a gauge of a bank's financial strength - of between 8.1
and 8.5 percent at the end of 2013 under full Basel III capital
rules, below most rivals.
McEwan is due to announce the results of a strategic review
alongside the bank's 2013 results later this month.