UK banks have credit rating downgraded
Royal Bank of Scotland and Lloyds among those hit
SOME of Britain’s biggest banks were among 15 major financial institutions across the globe which suffered a downgrade in their credit ratings.
Moody’s cut one notch from Royal Bank of Scotland’s long and short-term rating while Lloyds’ long-term rating was also reduced one notch.
The downward move – which the agency announced it was considering in February – reflects fears that the banks’ growth and profit prospects are declining.
And it raised speculation that it could spark a rise in mortgage interest rates.
Lloyds said it believed the change would have “limited impact on our funding costs and market capacity”.
It said it was “encouraging news” given speculation over a two-point drop.
RBS criticised the “backward looking” change which it said failed properly to recognise “substantial improvements” to the group’s balance sheet, funding and risk profile.
But it added: “The Group believes the impacts of this downgrade are manageable.”
A Treasury spokesman said: “All UK banks have significantly improved the strength and resilience of their balance sheets since the start of the financial crisis.”
Meanwhile the head of the International Monetary Fund has warned that the euro is under “acute stress”.
Christine Lagarde piled pressure on Germany by advocating a series of measures to pull Europe out of its crisis that Chancellor Angela Merkel has strenuously opposed.
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