U.K. Banks downgraded

Moodys cut ratings of 15 Banks Worldwide of which 4 are British., which means borrowing will be higher both for Home Loans and Credit Cards and
Overdrafts.
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7:12am UK, Friday June 22, 2012

Home owners and businesses face the prospect of higher interest rates after Britain's biggest banks had their status downgraded.
The credit ratings agency Moody's has slashed its assessments of 15 major world banks - among them RBS, Barclays and HSBC in the UK and JPMorgan, Goldman Sachs and Citigroup in the US.

The downward move, which the agency announced it was considering in February, reflects fears that the banks' growth and profit prospects are declining.

:: Q&A - How Banking Downgrades Affect UK

Among the others downgraded are, Bank of America, Societe Generale, Credit Agricole and Deutsche Bank.

The downgrades range in scope from one notch to two notches depending on the particular institution.

Barclays has been given a two-notch downgrade, while HSBC and RBS were downgraded by one notch.

Sky's City editor Mark Kleinman earlier exclusively revealed that the announcement. He said: "This is going to have some impact on the funding costs of these banks.


RBS Share Price 1-Month Chart

"I think there'll be some relief in the City that the downgrades weren't more severe because it's certainly possible that Moody's could have gone further."

In response to the downgrade, RBS said in a statement: "The group disagrees with Moody’s ratings change which the group feels is backward-looking and does not give adequate credit for the substantial improvements the group has made to its balance sheet, funding and risk profile.

"Nonetheless, the group believes the impacts of this downgrade are manageable, bearing in mind its £153bn liquidity portfolio."

Banks have been under scrutiny amid the pressure facing the industry from the effects of the global financial crisis.

Kleinman said the move is part of the agency's wider reassessment of the health of banks.

The major ratings agencies have rushed to downgrade banks across the Continent in recent months, particularly as the eurozone's problems have intensified.

A cut last month to the credit rating of Santander UK, the Spanish-owned lender, triggered speculation about the safety of customers' savings which was quickly dismissed by the bank.

The latest wave of downgrades will bring many of the other UK banks in line with Santander UK and there will be no resulting impact on the security of their savings.

On Thursday bank shares lost value in late trading on the FTSE 100, with RBS the biggest faller of the main UK banks.

Thanks Panda. Do you know which is the fourth bank to be downgraded.

Article refers to 4 then "Barclays has been given a two-notch downgrade, while HSBC and RBS were downgraded by one notch."

Santander UK appears to have stayed the same so it isn't them.

Morning gillyspot, it is Lloyds..........what a mess !!!!! One analyst has just said the eurpoean crisis will not be solved in her lifetime, charming.! This is the BBC report


June 2012 Last updated at 07:44 Share this pageEmail Print Share this page

The credit ratings agency Moody's has downgraded 15 global banks and financial institutions.

The UK banks downgraded were Royal Bank of Scotland, Barclays and HSBC. Lloyds also had its rating cut by Moody's in a separate announcement.

In the US, Bank of America and Citigroup were among those marked down.

BBC business editor Robert Peston said that banks were concerned as the downgrades may make it harder for them to borrow money commercially.

Moody's global banking managing director Greg Bauer said in the agency's statement: "All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities."

The other institutions that have been downgraded are Goldman Sachs, Morgan Stanley, JP Morgan Chase, Credit Suisse, UBS, BNP Paribas, Credit Agricole, Societe Generale, Deutsche Bank and Royal Bank of Canada.

'Disagrees'

Moody's said it recognised "the clear intent of governments around the world to reduce support for creditors", but added that they had not yet put the frameworks in place that would allow them to let banks fail.

Some of the banks were put on negative outlook, which is a warning that they could be downgraded again later, on the basis that governments may eventually manage to withdraw their support.

Continue reading the main story “
Start Quote
The most interesting thing about the Moody's analysis is that it, in effect, creates three new categories of global banks, the banking equivalent of the Premier League, the Championship and League One”
End Quote
Robert Peston

Business editor

--------------------------------------------------------------------------------
Read more from Robert

In a statement, Royal Bank of Scotland (RBS) responded to its downgrade saying: "The group disagrees with Moody's ratings change, which the group feels is backward-looking and does not give adequate credit for the substantial improvements the group has made to its balance sheet, funding and risk profile."

RBS estimated that the downgrade could mean it needing to find an extra £9bn in collateral for its debts.

Lloyds said it believed that the change would have "limited impact on our funding costs and market capacity".

Of the banks downgraded, four were cut by one notch on Moody's ranking scale, including HSBC, Royal Bank of Scotland, and also Lloyds.

A further 10 banks had their rating reduced by two notches, including Barclays. Credit Suisse was lowered by three notches.

"The biggest surprise is the three-notch downgrade of Credit Suisse, which no one was looking for," said Mark Grant, managing director of Southwest Securities.

Peter Hahn, a former executive at Citigroup and now a lecturer at Cass Business School in London, said the downgrades could limit the banks' activities.

He added: "Banks are going to have to put up collateral in their transactions with other banks.

"As they get downgraded, other banks and system players don't want exposure.

"It's a constraint on capital, it's a constraint on business, so it's obviously not welcome for us, trying to get more money into the economy."

I find the importance of Moodys and the other credit agency (can't recall name) quite worrying as they can downgrade countries too. Does anyone hold them to account if they bankrupt a nation by one of their ratings?

I heard a Swiss banker on R4 yesterday morning & he said the main woe of the world in situations like this is the short term sellers/buyers in the stock market. They make money quickly but at the expense of companies creditworthiness and long term stakeholders such as pension funds.

He suggested bringing in a financial transaction tax (say 2%) on each share deal which would stop the short term selling.

When asked whether UK bankers & politicians would do anything about it. He said of course not as it wasn't in their interests to do so.

Sadly I agree with him. Bankers even though they are charity cases (we are paying to keep them afloat) aren't interested in anyone else but themselves & the government (successive ones) have relied far too heavily on the taxes paid by them.

The Banks of course are furious ,suggesting this is a backward move but Moody's, Fitch and Standard and Poors interest is for the Investors and Bank
Account holders.

gillyspot, the Banks are no longer interested in their clients, and the regulatory bodies let them get away with everything, from sub-prime mortgages,
hedge funds, letting people open Credit Accounts with an immediate credit of £7,000 without checking the customers ability to pay. Lending Mortgages
of up to 125% the value of the property ......never once did any Government try to stop this gambling !!!!!

Even now, with this banking crisis, the Btiish Banks have not been ordered to retain liquidity or stop using Customers money to pay themselves big fat
Bonuses and and gamble with their accounts.

Bankers seem to be a law unto themselves.

The last people they consider are their customers or employees (unless it is one of the directors / non exec directors) who regularly vote for massive pay deals amongst themselves with no reason other than lining their own pockets.

Even Fred Goodwin got away with a massive pension when he was a major cause of where we are now with mass unemployment and people losing their homes because of it.

Still what do the government do? Nada

It's going to take one honest Prime Minister one day to stand up to the Banks , sadly there is no one in any of the Political Parties at present who is
capable of acting for the people .

UK is a triumverate of corruption now.

Murdoch-Parliament-Banks

Possibly should include the Metropolitan Police in there also.

No one will get into power until the whole pack of cards comes tumbling down. I don't believe Leveson is anything other than a papering excercise with just one or two wrists being slapped but the status quo will still remain.

Until the corruption is removed root & branch the UK will never again be the country it once was.

gillyspot wrote:UK is a triumverate of corruption now.

Murdoch-Parliament-Banks

Possibly should include the Metropolitan Police in there also.

No one will get into power until the whole pack of cards comes tumbling down. I don't believe Leveson is anything other than a papering excercise with just one or two wrists being slapped but the status quo will still remain.

Until the corruption is removed root & branch the UK will never again be the country it once was.

Maybe it is going to be a catastrophe of some kind to really bring about change because at the moment I see no improvement in the situation. People
have always proved stalwart in a crisis and out of the crisis perhaps honest Goverment will emerge. Banks will fail anyway because more and more
people use internet banking , maybe a new Boss at SY will clean up the Met and other Police Stations follow suit. Just a thought.

Remember internet banking is mainly run by banks on the highstreet so the only losers by using internet only accounts are the workers in the branches.

TBH I trust most police forces in UK just not the Met. They have been far to cosy with MPs and media for far too long.

I agree it will take a catastrophe of massive proportions to change things. I don't trust any of the 3 big parties to actually do what they say now.

A sad state of affairs IMO.

gillyspot wrote:Remember internet banking is mainly run by banks on the highstreet so the only losers by using internet only accounts are the workers in the branches.

TBH I trust most police forces in UK just not the Met. They have been far to cosy with MPs and media for far too long.

I agree it will take a catastrophe of massive proportions to change things. I don't trust any of the 3 big parties to actually do what they say now.

A sad state of affairs IMO.

Yes gillyspot maybe when the EU decides to let us farm on our own land again , fish in our waters, Govern ourselves, and a future goverment decide
to pay firms to take on apprentices again, sort out the tax dodgers, welfare cheats, illegals . teach prisoners a skill which they can use for the benefit
of the community .......then Britain will be O.K.. not much to ask is it.

You wouldn't have thought it was a big ask but we are through EU being ruled by non elected liars who can't even balance their own accounts yet think they can tell everyone what to do.

How I wish I had been old enough to vote when Heath lied to us over Common Market objectives. IMO always was to be a United States of Europe not a common market to share goods and services.