Tuesday, December 22, 2009
S&P says “We no longer consider the UK to rank among the most stable and low-risk banking systems”
Standard & Poor's on Monday lowered the collective rating of Britain's banks in anticipation of "high credit losses". By slashing the "banking industry country risk assessment" (BICRA) from group two to group three, the UK's financial system is now considered less secure than those of Italy and Belgium, and on a par with Chile, Portugal and Austria. It added that UK banks had no option but to reduce their debt, which "will lead to an elevated rate of loan losses for the next two years [and] will weigh on the growth prospects for the UK relative to many other large mature market economies" The agency is particularly concerned about debt levels in "households and in the property and construction related sector". It expects banks to rack up loan losses of between Â£150bn and Â£250bn to 2011"