Ulster Bank's credit rating has been downgraded by rating agency Fitch today amid increased Brexit uncertainty and the impact it could have on its UK parent – Royal Bank of Scotland.
Fitch Ratings said today it had placed Ulster Bank 'A-' Long-Term Issuer Default Rating (IDR) on its negative rating watch.
This comes after the credit rating agency put Royal Bank of Scotland on a similar footing due to "heightened uncertainty over the ultimate outcome of the Brexit process".
Fitch noted Ulster Bank's rating is driven by potential institutional support from Royal Bank of Scotland, adding that it expects "an extremely high probability" of support from its UK parent if required.
Fitch said that any support required by Ulster Bank would be manageable for RBS, given its small size relative to the size of its parent group.
"Ireland is a strategically important market for RBSG and we believe that if RBSG did not provide any required support, this would cause high reputational risk with a potentially significant negative impact on other parts of RBSG", it stated.
The agency also noted that support has been provided in the past to Ulster Bank when required.
Fitch said it expects to move the negative rating watch from RBS in the second quarter of 2019 but it cautioned that the rating may be maintained for longer if Brexit negotiations are extended.