UK lenders see their credit ratings slashed by Moody’s 

Moody’s has raised concerns over the banking sector.

The credit ratings agency, which advises investors on the likelihood that companies will be able to repay their debt, said it was downgrading its outlook on a swathe of lenders from ‘stable’ to ‘negative’.

Such a move often makes it more expensive for lenders to raise money from investors when they need to. 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 seen their credit ratings downgraded by Moody’s

A Moody’s spokesman said: ‘The action reflects the potentially weaker capacity of the Government to support the country’s systemic banks.’

Usually Moody’s assumes that if a bank hits the buffers, it will have some support from the Treasury. But now the outlook for the national debt has weakened, so has the banks.

Last Friday, it changed its outlook on the Government debt to negative because of ‘heightened unpredictability in policymaking amid weaker growth prospects and high inflation’.

There were also risks that the towering £2.4 trillion could become unaffordable due to ‘likely higher borrowing and risk of a sustained weakening in policy credibility’.

Moody’s took similar action against Germany’s banking sector in 2019, as lenders’ profitability and creditworthiness weakened in the low interest rate environment.