UK lenders Barclays, HSBC, Lloyds Bank and Natwest see their credit ratings cut by Moody’s
Moody’s has expressed concern about the banking sector.
The credit rating agency, which advises investors on how likely companies are to repay their debt, said it was lowering its outlook on a range of lenders from “stable” to “negative.”
Such a move often makes it more expensive for lenders to raise money from investors when they need it. Barclays, Santander UK, HSBC, Lloyds Bank and Natwest were caught up in the downgrades.
Concerns: Barclays, Santander UK, HSBC, Lloyds Bank and Natwest have all had their credit ratings downgraded by Moody’s.
A Moody’s spokesman said: “The action reflects the government’s potentially weaker ability to support the country’s systemic banks.”
Moody’s generally assumes that if a bank hits the shock absorbers, it will have some support from the Treasury. But now the outlook for the national debt has weakened, as have the banks.
Last Friday, it changed its outlook on government debt to negative due to “increased unpredictability in policymaking amid weaker growth prospects and high inflation.”
There were also risks that the sky-high £2.4 trillion could become unaffordable due to “likely further indebtedness and the risk of a sustained weakening of policy credibility”.
Moody’s took similar action against Germany’s banking sector in 2019 as lenders’ profitability and solvency weakened in the low interest rate environment.