MOODY'S CONFIRMS Aa2 LONG-TERM RATINGS OF LLOYDS BANK PLC AND Aa3 LONG-TERM RATINGS OF CHELTENHAM AND GLOUCESTER BUILDING SOCIETY
New York, 04-06-95 -- Moody's Investors Service confirmed the long-term deposit and debt ratings of Lloyds Bank Plc (deposits and senior debt at Aa2). Moody's also confirmed the ratings of Cheltenham & Gloucester Building Society (deposits and senior debt at Aa3). These confirmations conclude the rating reviews initiated on April 21, 1994, when it was announced that Lloyds Bank had agreed to acquire Cheltenham and Gloucester building society for approximately œ1,800 million ($2,880 million).
The rating agency noted that the acquisition would strengthen Lloyds' domestic retail franchise by substantially increasing the bank's residential mortgage lending capacity. But it also said that the acquisition of Cheltenham and Gloucester for cash represents a major purchase in relation to Lloyds' resources and that the group's core capitalisation would be reduced significantly upon completion of the acquisition. However, Lloyds' internal capital generation is substantial at present which should enable the group's capitalisation to grow again in the medium-term. Regarding the future stability of Lloyds' existing ratings, Moody's added that it expects the group to pursue its growth strategy without significantly hampering its financial strength, including its capitalisation.
The rating agency noted that Cheltenham and Gloucester would continue to operate as a wholly-owned subsidiary of Lloyds Bank. As such it would retain a large degree of autonomy within the Lloyds group, and this is reflected in the agency's confirmation of its ratings.
The following ratings were confirmed:
Lloyds Bank Plc -- the rating of the bank for its long-term deposits of Aa2, the long-term subordinated debt rating of Aa3, and the rating of the Primary Capital Undated Floating Rate Notes of A1. The Prime-1 rating of the bank for its short-term deposits and its commercial paper was not under review and is confirmed.
Cheltenham & Gloucester Building Society -- the Aa3 long-term rating for deposits and senior debt, the subordinated debt rating of A2, and the rating of the Permanent Interest Bearing Shares of Baa1. The Prime-1 rating of the society for its short-term deposits and its commercial paper was not under review and is confirmed.
Lloyds Bank Plc, headquartered in London, is the third-largest bank in the United Kingdom with total assets at end-1994 of œ81 billion ($130 billion). Cheltenham & Gloucester Building Society, headquartered in Gloucester, is the sixth-largest building society with total assets of œ19 billion ($30 billion) at end-1994.
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