Ratings agency Moody's has downgraded Yorkshire and Clydesdale Bank's long-term deposit rating to Baa2 from Baa1.
Earlier this week a request for information from a ratings agency, understood to be Moody's, delayed the banks' long awaited flotation on the London Stock Exchange.
Moody's said on Thursday that Yorkshire Bank's parent company CYBG's short-term deposit rating was affirmed at Prime-2, while the commercial paper rating was downgraded to Prime-3 from Prime-2.
At the same time, the agency upgraded the bank's standalone baseline credit assessment (BCA) to baa3 from ba1, while the adjusted BCA was affirmed at baa3.
It added that the outlook on the deposit ratings is stable.
Dany Castiglione, Moody's lead analyst on CYBG, said: "The rating actions take into account three main factors: firstly our upgrade of Clydesdale's standalone baseline credit assessment; second the elimination of potential support from former parent National Australia Bank Limited on completion of its demerger; and thirdly, a shift in the bank's liability structure exposing senior deposits and creditors to higher risk."
Moody's said the upgrade of CYBG's baseline credit assessment was driven by the bank's improved credit fundamentals following the finalisation of the demerger.
A spokesman for Yorkshire Bank said: "CYBG welcomes the upgrade of its stand alone BCA rating reflecting the improved credit fundamentals following the finalisation of the demerger.
"As announced on February 2, CYBG does not consider the downgrade of the Long Term Deposit and Commercial Paper Rating to have any material impact on its or the bank's ability to raise funding, the overall cost of funding, or the financial outlook for CYBG or the Bank."
CYBG's share price rose 2.5 per cent this morning following a seven per cent rise on Wednesday.