Moody’s cuts British, Portuguese banks | india | Hindustan Times
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Moody’s cuts British, Portuguese banks

india Updated: Oct 07, 2011 23:35 IST
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The credit rating of two top UK banks were cut on Friday due to the likelihood of less state support in a future crisis, as Britain sought to reassure investors its banks were well capitalised and able to cope with a European debt crisis.

Ratings agency Moody's cut its rating on Royal Bank of Scotland by two notches, downgraded Lloyds by one notch, and cut its ratings on Santander UK, the Co-Operative Bank, Nationwide Building Society and seven other smaller British building societies.

Banks had been on review for possible downgrade as part of a trend where state support for lenders is being reduced, and reforms proposed last month by Britain's Independent Commission on Banking (ICB) had been expected to have a negative influence.

"The market's central expectation around the ICB impact had been for a 2-notch downgrade across the board, so it's better than expected," said Gareth Hunt, analyst at Investec.

Meanwhile, Moody's also downgraded nine Portuguese banks, citing their exposure to government debt and a weak economic growth outlook.

Moody's downgraded Portugal to Ba2, with outlook negative in July. Battling to emerge from recession, the country got €78 billion ($104 billion) bailout this year.