Lloyds and RBS are set to be among the banks hardest hit by the planned dowgrades by Moody's, the most important of the three established ratings agencies.
Profits at Lloyds are forecast to fall 16pc next year, while RBS's earnings will drop 8pc, as the banks face higher funding costs, as a result of their downgrades by Moody's, according to Citigroup.
Both banks have put in place major turnaround programmes aimed at returning them to profitability. But Citigroup warned these plans could be disrupted by the downgrades, which could also upset plans to privatise the lenders.
Lloyds, which is 41pc owned by the state, is currently rated A1 by Moody's but is expected to be downgraded by two notches to A3. Citigroup said the lender would as a result have to put up a further £24bn of assets against its secured borrowings, to compensate for the increase in its perceived riskiness.
Lloyds shareholders must love the genius that is Gordon.
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