The credit rating of a dozen UK banks has been cut by Moody’s. It based that on the likelihood of less state support in a future crisis.
Royal Bank of Scotland was the most affected with a two notch downgrade, Lloyds was cut by one notch, and there were also reductions for Santander UK, the Co-Operative Bank, Nationwide Building Society and seven other smaller British building societies.
The move came as the British government sought to reassure investors its banks were well capitalised and able to cope with a European debt crisis.
Moody’s Investors Service also downgraded its ratings on nine Portuguese banks, citing the increased asset risk linked to their holdings of Portuguese government debt and the sovereign downgrade of Portugal in July.
Meanwhile Standard and Poor’s downgraded the core banks of Franco-Belgian financial group Dexia — the bank which has come to epitomise the European debt crisis through its unusually large exposure to the debts of the euro zone’s weakest country, Greece.
Rival Fitch placed Dexia bank entities on rating watch negative.