Belfast Telegraph

Downgrade threat to banks

By Russell Lynch and Stephen Foley

Moody's Investors Service sent shockwaves through the global banking system and sparked fury in the City yesterday as the ratings agency threatened to slash the credit scores of more than 100 banks.

The agency has put the ratings of 114 banks in Europe under review, as well as 17 investment banks. The move could hit 122 banks as nine of the investment banks are based in Europe.

All four of the UK's big banks, HSBC, Barclays and the state-backed Royal Bank of Scotland and Lloyds, face potential downgrades, affecting their ability to fund themselves in financial markets and potentially hampering an already weak recovery.

Bank analyst Michael Symonds said: "A lower rating will make it more expensive for them to fund themselves and make funding sources scarcer."

One senior banker said: "This is yet another example of the ratings agencies pandering to the populist mood rather than giving markets and investors anything informed, useful or timely."

Moody's assault on the banks came two days after it slashed sovereign ratings on a host of European nations, including putting Britain's AAA credit rating on negative outlook.