The credit rating of two top UK banks were cut on Friday due to the likelihood of less state support in a future crisis, as Britain sought to reassure investors its banks were well capitalised and able to cope with a European debt crisis. Ratings of nine Portuguese banks were also downgraded on Friday.
Moody?s Investor Service cut its rating on Royal Bank of Scotland by two notches, downgraded Lloyds by one notch, and cut its ratings on Santander UK, the Co-Operative Bank, Nationwide Building Society and seven other smaller British building societies. But RBS said in a statement that it remained one of Europe?s most strongly capitalised banks.
Banks had been on review for possible downgrade as part of a trend where state support for lenders is being reduced, and reforms proposed last month by Britain?s Independent Commission on Banking (ICB) had been expected to have a negative influence.
UK finance minister George Osborne said banks remained well-capitalised and in better shape than many of their European rivals, who face bigger losses on holdings of peripheral euro zone debt.
Nine Portugese banks downgraded by Moody?s
Moody?s also downgraded nine Portuguese banks on Friday due to increased asset risk as a result of the banks? holdings of Portuguese government debt and the sovereign downgrade of Portugal in July to Ba2 with a negative outlook. ?The key driver for the downgrades of most banks? debt and deposit ratings is Moody?s assessment of the deterioration of their unsupported financial strength,? said the ratings agency.
Moody?s said it had downgraded by one or two notches the senior debt and deposit ratings of nine banks and downgraded by one or two notches the standalone ratings of six of these banks.