This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.
X
MM+Cover+small+181214
Categories:Investments

Moody's warns of UK bank downgrade

  • Print
  • Comments (1)

UK banks could suffer downgrades or reviews to their credit ratings because authorities are no longer as willing to bail them out, ratings agency Moody’s says.

The agency’s review may complicate the ongoing debate over reforming the crisis-hit UK banking system, which is struggling to keep its credit ratings high and its borrowing rates low.

The Independent Commission on Banking releases its report on British banking reform on Monday.

In a statement, Moody’s says it is reviewing the level of systemic support that UK’s banks and their senior lenders enjoy following less encouraging pronouncements from the country’s financial authorities.

Moody’s stresses the review has not been launched over fears of the strength of the British banking industry or the government, but because of the ongoing guidance from the Bank of England, the Financial Services Authority and the Treasury that banks could not expect bailouts using public money in the future.

The ratings agency claims that the high level of support built into the ratings of UK financial institutions is unlikely to be considered “systemic” over the medium term, prompting the examination.

Moody’s points out that UK banks now have “significantly” more systemic support incorporated in their senior debt ratings than before the financial crisis and says it has been planning to remove this “extraordinary” level of support from the ratings for some time.

“This reassessment could trigger negative outlooks, reviews for possible downgrade or downgrades for some ratings and will be taking into consideration Moody’s expectations on how the relevant banks’ standalone credit strength will develop,” the group explains.

  • Print
  • Comments (1)

Daily Email Updates
If you enjoyed this article, sign up to receive the latest news and analysis from Money Marketing.

The Money Marketing CPD Centre
Build your annual CPD - you can log and plan your CPD hours for free with The Money Marketing CPD Centre.

Money Marketing Awards 2015
Put your firm forward as the leading practitioner in your field. Adviser and Advertising categories are open to entries - Enter Now.

Readers' comments (1)

  • I find it amazing that the Ratings agencies are so vocal these days. Let it not be forgotten the hand they played in the packaging and rating of sub-prime mortgages. Nowadys they like to make a noise when they downgrade not so long back there was no need to everything was AAA!!!!!

    Unsuitable or offensive? Report this comment

Have your sayEdit my profile/screen name

You must sign in to make a comment

AXA Wealth


Fund Data

Editor's Pick



Poll

Two years on from the RDR, do you think consumers are better off as a result?

Job of the week

Latest jobs

View all jobs

Most recent comments

View more comments