UK lenders see their credit rating downgraded by Moody’s

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UK lenders Barclays, HSBC, Lloyds Bank and Natwest have their credit ratings cut by Moody’s

Moody’s has raised concerns about the banking sector.

The ratings agency, which advises investors on the likelihood of companies being able to repay debt, said it was lowering its outlook on a group of lenders from “stable” to “negative”.

Such a decision often makes it more expensive for lenders to raise funds from investors when they need it. Barclays, Santander UK, HSBC, Lloyds Bank and Natwest were all 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 spokesperson said, “The action reflects the government’s potentially weaker ability to support systemic banks nationwide.”

Usually, Moody’s assumes that if a bank meets the safety thresholds, it will have some support from the Treasury. But now the national debt outlook has weakened, as have the banks.

Last Friday, it changed its outlook on government debt to negative due to “increased unpredictability in policy-making amid weaker growth prospects and high inflation.”

There were also risks that the towering £2.4trillion could become unaffordable due to “probably higher borrowing and the risk of lasting weakening of political credibility”.

Moody’s took similar action against the German banking sector in 2019 as lender profitability and solvency weakened in the low interest rate environment.

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