UK financial firms downgraded by Moody's rating agency

Moody's has downgraded the credit rating of 12 UK financial firms including Lloyds TSB, RBS, Nationwide and Santander UK.


The ratings agency said it now believed the government was less likely to support firms that got into trouble.

However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system".

Moody's also downgraded nine Portuguese banks, blaming financial weakness.

Shares in both Lloyds and RBS were among the FTSE 100's biggest fallers, closing down 3.4% and 3% respectively.

Seven UK building societies were among the firms downgraded, a move that the Building Societies Association (BSA) called a "normalisation" that had "been expected for some time".

"It does not represent any change in financial strength and it is business as usual across the sector," the BSA said.

Analysts and investors watch closely the ratings that firms such as Moody's put on the creditworthiness of companies and governments.

Along with Standard & Poor's and Fitch, Moody's is one of the big three agencies. Their ratings influence heavily the amount interest that companies and governments pay to borrow money.

Reassessment
In a statement, Moody's said: "Moody's Investors Service has today downgraded the senior debt and deposit ratings of 12 UK financial institutions and confirmed the ratings of one institution