Banks get warning on credit ratings
More than a dozen UK banks and building societies have been told their credit ratings are in danger of being downgraded as a result of the expected withdrawal of government support for the industry.
The leading ratings agency Moody's has placed 14 of the 18 financial institutions it covers on review for possible downgrades to their creditworthiness. They include Lloyds and Royal Bank of Scotland, as well as building societies such as Yorkshire and Nationwide.
The threat of a downgrade, which would result in higher borrowing costs for the banks, was reflected in a 1% drop for shares in the major banks yesterday.
Elisabeth Rudman, Moody's senior credit officer, said: "It (the review) has been initiated in response to ongoing guidance from the UK authorities that banks that fail in the future should not expect capital injections from the public purse."