Sky News reported that Moody’s was “poised to downgrade the creditworthiness of some of Britain’s biggest banks and building societies,” after the Independent Commission on Banking (ICB) publishes its final report on September 12.
The final report from the ICB, set up to examine reforming the British banking industry after it got badly burnt by the credit crisis, is set to back ring-fencing banks’ retail arms from riskier trading operations to protect taxpayers from future financial crises.
In response to the Sky News report, Moody’s said it had not changed its position since issuing a statement on August 2 when it said several leading British banks remained on review for a possible downgrade.
“As announced on 2 August, our review of UK financial institutions continues. The review is a broad reassessment of the appropriate levels of systemic support that Moody’s expects going forward,” a Moody’s spokesman said.
“It will also take into account the ICB proposals, while recognizing that the full implications of the proposals and the government’s response may not emerge for some time. We will fully inform the market at the conclusion of our review,” he added.
Part-nationalized lenders Royal Bank of Scotland and Lloyds are part of a clutch of banks and mutually-owned savings firms under review by Moody’s, along with the UK arm of Spanish bank Santander and Bank of Ireland.
Lloyds fell 7.1 percent, while RBS closed down 5.4 percent. Barclays fell by 8.4 percent, while HSBC ended down 2.6 percent.
Britain has an 83 percent stake in RBS and a 41 percent holding in Lloyds after it had to bail out both banks with billions of pounds of taxpayers’ money during the credit crisis.
