BNZ's UK cousin receives credit rating downgrade from S&P

Bank of New Zealand's Australian parent, National Australia Bank, announced its wholly-owned UK subsidiary Clydesdale Bank had its stand-alone credit rating downgraded by Standard & Poor's. The decision had no impact on NAB's credit ratings, NAB said. Clydesdale's long and short term counterparty credit ratings were downgraded to 'A+/A-1' from 'AA-/A-1+'. The outlook for the ratings is negative. "The ratings action reflects our view that Clydesdale's stand-alone credit profile has deteriorated, and that it could demonstrate weaker-than-anticipated resilience if the bank's operating environment deteriorates beyond our current expectations," Standard & Poor's said. "The ratings on Clydesdale continue to reflect our view of its strategically important position within its wholly owned parent group, National Australia Bank Ltd.." "We consider Clydesdale to be of moderate systemic importance to the U.K. banking system, but factor no governmental support into the ratings on the bank." "In our opinion, Clydesdale faces significant challenges from the increasingly difficult economic and market environment in the U.K., which we expect will pressurize earnings over the coming two years." "The rating could be lowered if Clydesdale's profitability appears likely to weaken faster or further than we currently expect in our base case. It could also stem from a weakening in our view of Clydesdale's status in the NAB group. Important rating factors here include our view of the bank's strategic importance to NAB, the strength of parental support, and whether operating performance will be consistent with both NAB and similarly rated peers."