Moody's in threat to cut rating of 14 UK financial groups

City A.M. Reporter
Credit rating agency Moody's said it may cut its rating on 14 British financial groups, including Lloyds and Royal Bank of Scotland, following a reassessment of the level of systemic support they need.

The companies which could be downgraded by Moody's included Bank of Ireland UK, Co-Operative Bank, Coventry Building Society (A3); Lloyds TSB Bank and Nationwide Building Society.

Moody's added on Tuesday it could also cut Newcastle Building Society, Norwich & Peterborough Building Society (Baa2/ P-2); Nottingham Building Society and Principality Building Society (Baa2/P-2).

Royal Bank of Scotland, Santander UK, Skipton Building Society, West Bromwich Building Society and Yorkshire Building Society may also be cut, it added.

"The reassessment is not driven by either a deterioration in the financial strength of the banking system or that of the government," said Elisabeth Rudman, a Moody's Senior Credit Officer and lead analyst for a number of UK banks.

"It has been initiated in response to ongoing guidance from the UK authorities (the Bank of England, the Financial Services Authority and the Treasury) that banks that fail in the future should not expect capital injections from the public purse," she added.