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Sky Breaking: Moody's To Downgrade 14 Of 18 Uk's Top Banks

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Bad news, the cost of borrowing from the money markets for our UK banks will go up. These will be PASSED* on to YOU. Good bye low interest rates. The death spiral will now begin.

*Don't spend too much time looking at screens...

Edited by Money Spinner
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Bad news, the cost of borrowing from the money markets for our UK banks will go up. These will be pasted on to YOU. Good bye low interest rates. The death spiral will now begin.

Good news, the banks will find they have to be higher rates to attract savers (unless the BoE are giving them all the money they need via the backdoor).

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It certainly is... until the government comes up with yet another bullsh!t solution to all our problems, which, like all the others, lasts about 2 years (2001, 2003, 2005, 2007, 2009, 2011...)

That means they#ll be turning to the ******** bank then to fabricate some more misallocation.

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SKY: Exclusive: UK Banks Face Ratings Downgrade

Mark Kleinman May 23, 2011 10:31 PM

I have learned that the credit rating agency Moody's will announce on Tuesday that it is considering downgrading the creditworthiness of more than a dozen British financial institutions to reflect the eventual withdrawal of Government support for the banking industry.

I am told that Moody's, one of the big three global rating agency groups, will say in a statement to the stock exchange that it has placed 14 of the 18 banks and building societies it covers on review for downgrade.

People close to Moody's told me tonight that more than one of the big four UK banks, including Lloyds Banking Group, were among the institutions being put on review for downgrade.

The news is likely to be greeted cautiously in the City, which is attempting to assess the prospects for investing in UK banks once Government support for the industry begins to be withdrawn.

One senior bank executive told me tonight that the Moody's decision was "likely to be a damaging blow to investors' outlook on big UK lenders".

I'm also told that of the four institutions not placed on review for downgrade, at least one is being placed on negative outlook.

The Moody's statement will say that the review process will take about three months, during which the agency will assess the extent of the state support that should be incorporated into the credit rating of each institution.

This would take into account the difficulty for regulators to deal with a failure of that lender, according to people briefed on the Moody's statement.

It would also consider the "political acceptability" of additional taxpayer support for the banking system, I'm told.

As if you needed reminding, the Government stepped in during the financial crisis to provide hundreds of billions of pounds of emergency support to the banking industry.

The beneficiaries of that were Lloyds and Royal Bank of Scotland, in which the taxpayer took direct shareholdings, and the rest of the industry, which benefited from the provision of liquidity and other support schemes.

And as shareholders in those lenders, it's clearly not good news for taxpayers if the borrowing and funding costs of those lenders is suddenly set to increase. <_<

Moody's is expected to stress that its review of the creditworthiness of British banks has not been triggered by a specific deterioration in the financial strength of the banking system or of the Government.

But I'm told it will say that the existing level of support from the state account for between two and five notches of uplift for the bigger UK banks and one to five notches of uplift for smaller financial institutions.

It is of course worth making the point that the rating agencies themselves have endured a torrid time since the banking crisis because of their propensity to award triple-A ratings to financial products and institutions which turned out to be unworthy of them.

On that basis, it will be interesting to see what the City makes of tomorrow's announcement.

Moody's declined to comment beyond saying that it never commented on future ratings decisions. None of the UK banks would comment.

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So what will the UK rely on, huh? Banking will be in trouble, housing down the drain - that's the entire economy gone! ;)

Cashconverters, tanning salons, nail bars, coffee shops, Poundland.... there's no end to the UK's economic resources.

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Simple solution. The government support will never be withdrawn. They will continue to be state owned banks. Was anyone expecting the support to be withdrawn anytime soon anyway?

Not soon but i expect support to be withdrawn and bondholders to take a bath when the UK defaults, either way the important thing is that anyone pretty wealthy rather than being caught with their pants down and given a haircut down to the bank protection level in 2008 has had plenty of time and warning to get their affairs in order and move their accounts to some of the relatively safer banks, which in the UK all happen to be private

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Everyone knows this is well overdue.

Rating Agencies are as crooked as a dogs hind leg.

Edited by Dan1
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How often have I seen those words posted here?

(Google offers a clue. I didn't look beyond the first page of results from this site, but those go back to 2007).

Just because it hasn't happened yet...

Wall Street Journal:

Moody's said the review should be resolved within about three months.

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