Downgrades for 18 financial institutions in Europe

DowngradeMoody's Investors Service has downgraded the senior debt and deposit ratings of twelve UK financial institutions and six Portuguese banks.

In the UK, the ratings agency’s reassessment assumes “a decrease in the probability that the UK government would provide future support to financial institutions, if needed”.

Its rating actions include a one-notch downgrade of Lloyds TSB Bank, Santander UK, Co-Operative Bank, a two-notch downgrade of RBS and Nationwide Building Society. Seven smaller building societies saw downgrades of one to five notches.

“Announcements made, as well as actions already taken by UK authorities, have significantly reduced the predictability of support over the medium to long-term,” a statement says. “The government is likely to continue to provide some level of support to systemically important financial institutions, which continue to incorporate up to three notches of uplift.”

It has reviewed the standalone ratings of all entities prior to concluding on the debt ratings.

In a separate announcement for the UK also released today, the ratings agency covers the upgrade of the standalone rating of Co-Operative Bank and earlier announcements of upgrading the standalone ratings of Santander UK, Nationwide, Yorkshire, and Principality Building Societies.

Its rating actions in Portugal involve the downgrades by one or two notches of the senior debt and deposit ratings of nine banks and downgrades by one or two notches of the standalone ratings of six of these banks.

The six banks which experienced downgrades of both their standalone ratings and their debt and deposit ratings are Caixa Geral de Depositos, Banco Comercial Portugues, Banco Espirito Santo, Banco BPI, Banco Santander Totta, and Caixa Economica Montepio Geral.

Banco Internacional do Funchal and Banco Portugues de Negocios saw their debt and deposit rating downgraded as a consequence of the weaker Portuguese sovereign.

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