December 11, 2017 / 4:50 PM / in 10 months

Correction: RBS's Covered Bonds Rating Unaffected by Planned Issuer Transfer

(The following statement was released by the rating agency) LONDON, December 11 (Fitch) This commentary replaces the version published on 6 December 2017 to clarify that the transferred covered bonds will become obligations of NatWest rather than be unconditionally guaranteed by NatWest as previously stated. Fitch Ratings says there would be no rating impact on The Royal Bank of Scotland PLC's (RBS, BBB+/Stable/F2) mortgage covered bonds (AAA/Stable) from the planned issuer transfer to National Westminster Bank Plc (NatWest, BBB+/Positive Watch/F2) under the proposed ring-fencing transfer scheme. In Fitch's view, the planned issuer transfer is neutral to the covered bonds ratings as payments of all amounts due in respect of the covered bonds will become obligations of NatWest, which is currently rated at the same level as RBS and is expected to be upgraded by one notch upon completion of the group's reorganisation. This view is reflected by Fitch's placement of Rating Watch Positive (RWP) on NatWest's Long-Term Issuer Default Rating (IDR) in late September 2017 (see "Fitch Affirms The Royal Bank of Scotland Group at 'BBB+'; Assigns Exp'd 'A-(EXP)' IDR to Adam & Co" dated 29 September 2017 on for more details). The ring-fencing transfer scheme is part of the bank's restructuring plan effected to comply with the UK ring-fencing legislation, which requires a separation of essential banking services from investment banking activities by 1 January 2019. The transfer is expected to become effective on 30 April 2018 or any later date agreed upon with the UK regulators and is contingent on the final court approval of the proposed scheme. Upon completion of the transfer, NatWest will become the issuer and sole seller under the covered bond programme and assume other roles and obligations of RBS under the programme documents, including that of a cash manager, seller and servicer of loans, the interest rate swap provider and the covered bond swap provider. Any new issuance by NatWest will remain guaranteed by the assets-owning special purpose vehicle, which will be renamed to NatWest Covered Bonds Limited Liability Partnership. The cover pool will continue to consist of UK residential mortgage loans; however, only those originated by NatWest, and meeting the otherwise unchanged eligibility criteria stipulated in the programme documentation, will be permitted to be included in the pool. Contact: Barbara M. Burdzy Director +44 203 530 1820 Fitch Ratings Limited 30 North Colonnade London E14 5GN Anne-France Chane Analyst +44 203 530 1491 Cosme de Montpellier Senior Director +44 20 3530 1407 Media Relations: Athos Larkou, London, Tel: +44 203 530 1549, Email: Additional information is available on ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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