24th May 2011
Moody's' list includes the two banks with substantial state ownership Royal Bank of Scotland and Lloyds TSB, fellow High Street giant Santander as well as the UK's biggest building society Nationwide though HSBC and Barclays remain on the same ratings.
Here is the justification for the move from Elisabeth Rudman, a Moody's senior credit analyst and the lead analyst on many banks. Note how she stresses this is all about the regulatory environment and not about any sort of deterioration in the balance sheets or debt positions of the banks.
"The reassessment is not driven by either a deterioration in the financial strength of the banking system or that of the government. It has been initiated in response to ongoing guidance from the UK authorities (the Bank of England, the Financial Services Authority and the Treasury) that banks that fail in the future should not expect capital injections from the public purse.
"While we note – and will take into consideration – the technical difficulties in resolving larger, complex banks, we will also need to assess the likelihood of further developments in this area over the medium term, given the very clear determination of the UK government to put in place a resolution mechanism that can also be applied to large, complex banks."
Here is a take from across the Atlantic from the Wall Street Journal which concentrates on the UK's big four banks, though it suggests that the state supported banks which borrow very cheaply have the most to lose.