Moody's downgrades 12 UK lenders
The credit ratings agency Moody's has downgraded the senior debt and deposit ratings of 12 UK banks and building societies.
Moody's says that it has made the reductions because it believed British financial institutions would not necessarily get the support from Government if they ran in to further trouble.
In a statement Moody's said: "The downgrades have been caused by Moody's reassessment of the support environment in the UK which has resulted in the removal of systemic support for seven smaller institutions and the reduction of systemic support… for five larger, more systemically important financial institutions."
Some banking giants have had their ratings cut, including: Two-notch reductions for Royal Bank of Scotland and Nationwide Building Society. Also, Lloyds TSB and Santander have both been reduced by one-notch.
Shares in RBS and Lloyds fell at the start of trading, but then recovered. By early morning RBS shares were down 0.25% while Lloyds was 1% lower.
The Chancellor, George Osborne, told the BBC: "One of the reasons they are doing this is because they think the British government is actually moving in the direction of trying to get away from guaranteeing all the largest banks in Britain.
"People ask me how are you going to avoid Britain and the taxpayer bailing out banks in the future? The government in taking steps to do that.
"Therefore credit rating agencies and others will say, well actually these banks have got to show they can pay their way in the world."
Moody's also cut its rating on nine Portuguese banks.
7 October 2011
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