MOODY’S has put 14 of the UK’s biggest banks on review for a ratings downgrade due to regulatory efforts to resolve the “too big to fail” problem.
The move could significantly increase borrowing costs for banks as regulators draw up plans to reduce the likelihood that taxpayers will have to bail out failing banks in future.
Those under review include Lloyds TSB, NatWest, HBOS, RBS and Santander UK, while the outlook on Barclays’ senior debt was revised to “negative”. HSBC has escaped a change but remains on a negative outlook.
Moody’s said that the review was sparked by regulators’ desire to create resolution plans that will make it easier to wind up collapsing banks rather than bail them out. “Current levels of systemic support account for two to five notches of uplift for the large UK banks,” the agency said.