Scope also affirmed all other existing ratings and assigned a new Issuer Rating of A to Lloyds Bank Corporate Markets, the future non-ring-fenced bank; all ratings with Stable Outlook.

Scope Ratings pointed out that, well ahead of the January 2019 deadline, Lloyds Banking Group PLC has made the necessary changes to its organisational and legal structure to implement UK ring-fencing requirements.

Lloyds Bank PLC, comprising the majority of the group’s retail and commercial banking activities, will become the future ring-fenced bank. Meanwhile, Lloyds Bank Corporate Markets PLC (LBCM) which will be active in lending to financial institutions, financial markets derivatives and capital markets, will be a non-ring-fenced bank.

As detailed in its February 2018 report looking at the implications of UK ring-fencing requirements, Scope considers ring-fencing to be mainly for the benefit of retail customers rather than institutional investors. Further, Scope’s analysis focuses on an operating company’s business model, financial metrics and importance to its group rather than on its ring-fencing status.

Scope affirmed the existing ratings on various Lloyds group entities. In addition, Scope assigned first-time Issuer Ratings of A+ and A to Lloyds Banking Group PLC and to LBCM, respectively. The one-notch differential between LBCM’s Issuer Rating and its parent’s is based on the former’s potentially less central role in the group’s strategy and on its inherently more volatile business mix.

The following rating actions have been taken regarding the various entities of the Lloyds group:

Lloyds Banking Group PLC

• Assigned new Issuer Rating of A+.
• Affirmed A rating on senior unsecured debt (MREL eligible).
• Affirmed BB+ rating on AT1 securities.

Lloyds Bank PLC

• Affirmed Issuer Rating of A+.
• Affirmed A+ rating on senior unsecured debt (not MREL eligible).
• Affirmed S-1+ rating on short-term debt.

Lloyds Bank Corporate Markets PLC

• Assigned new Issuer Rating of A.

All ratings have a Stable Outlook.