Moody's about the possibility of UK banks downgrading.

Moody's about the possibility of UK banks downgrading.

Recently the debt ratings of major British bank were lifted up by the expectations that government will continue aiding them in case of collapse danger as it was during the financial crisis. Now the situation has changed.

Moody's Investors Service claimed that some UK banks can be downgraded as Bank of England is going to stop its bailout programs. The most affected might be Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC that are by 85% and 41% respectively owned by government. These banks and Nationwide Building Society were rated one notch higher because it’s expected that they will get government support in case of emergency.

If the ratings are lowered, it will become more expensive for these banks to borrow money through the capital markets.

However, Moody's might not change ratings before British government begins to reduce ownership stakes in these banks. It still assumes that the government of the country will provide key banks with help.

Market news and analytics — FBS

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