Moody’s poised to downgrade UK banks

Thursday, June 21, 2012
By Paul Martin

The ratings agency Moody’s is expected to downgrade some of Britain’s biggest banks as early as this evening.

By Angela Monaghan
21 Jun 2012

The move is expected as part of a broader credit downgrade of some of the world’s major banks and could be delayed until after US markets close.

It is thought that British banks including Barclays, HSBC and Royal Bank of Scotland are facing a cut in their ratings by as much as two notches, reflecting the continued impact of the eurozone crisis on the global banking system.

A downgrade would potentially cost banks billions of pounds in additional funding costs as it essentially flags an increase in risks associated with lending to those institutions.

It would also force banks to hand over billions more in collateral to trading counter-parties.
Moody’s has already downgraded major banks in several European countries, including Spain and Italy, adding to the funding difficulties some of the lenders are experiencing. As part of that process, Moody’s also cut the rating on Santander UK, the Spanish-owned bank.

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