Moody’s has lowered credit ratings Friday of 12 British banks, including Royal Bank Scotland (RBS) and Lloyds, saying that the probability that the authorities will provide support to the banking sector on medium and long term has dropped.
The rating agency concluded the evaluation of the support that the banking sector might receive from the British government, which began in late May.
“Moody’s noted that the statements and actions of British authorities have significantly reduced the predictability of support on medium-term. Moody’s considers that the government will continue to provide a certain level of support to the banks of systemic importance.
However, it is likely that smaller financial institutions will be allowed to go bankrupt if they have financial problems. The demotions do not reflect a deterioration of the financial situation of the banking system or the government”, reads a release issued by Moody’s.
Moody’s cut the rating as banks Lloyds TSB and Santander UK (from AA3 to A1), RBS (from AA3 to A2) and nine other smaller credit institutions. Clydesdale Bank rating confirmed at A2.
HSBC and Barclays ratings were not changed.