Banks put brave face on downgrade by Moody's
Share
Lloyds TSB has shrugged off its ratings downgrade by Moody’s.
Last week the ratings agency downgraded the senior debt and deposit ratings of 12 UK banks and building societies.
Lloyds TSB and Santander were downgraded one notch from AA3 to A1, and Co-operative Bank one notch from A2 to A3.
RBS and Nationwide have been downgraded two levels, from AA3 to A2.
Moody’s says it made the changes because it believes it is now less probable that the government will provide support to financial institutions if they encounter difficulties.
But a spokeswoman for Lloyds TSB says the downgrade will have a minimal impact on its funding costs because its short-term rating is unchanged.
She adds that the new Moody’s rating is also on a par to the rating given by Standard & Poor’s, so is in effect reflecting what is already understood in the market.
She says: “It is important to note that both the standalone rating and the short-term ratings remain unchanged.
“We believe the Moody’s change will have minimal impact on our funding costs.”
Meanwhile, a spokesman for RBS says it has made significant progress in strengthening its credit profile since 2008 and is disappointed that Moody’s has not recognised this.
He says: “We are disappointed that Moody’s has not acknowledged the progress we have made in strengthening our credit profile.
“We have already completed our wholesale funding requirements for 2011 and continue to make excellent progress to date in strengthening key balance sheet measures in the second half.”
Moody’s has also downgraded the ratings of Newcastle, Norwich & Peterborough, Nottingham, Principality, Skipton, West Bromwich and Yorkshire building societies.
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
