UK banks downgraded

Lloyds, RBS and Nationwide are among the firms to be downgraded, as Moody's said it now thinks the UK government is less likely to support some organisations if they got into financial difficulties.
"This follows ongoing guidance from the UK Tripartite authorities (the Bank of England, the Financial Services Authority and the Treasury) that the government is more likely in the future to make greater use of its resolution tools to allow burden sharing with senior bondholders," said the agency.
RBS and Nationwide were both downgraded from Aa3 to A2, while Lloyds was downgraded one notch to A1 from Aa3.
However, Moody's added the changes do not reflect a "deterioration in the financial strength of the banking system".
Nonetheless, the downgrades will increase concern within the banking sector following the news earlier this week over the future of Dexia, which was rescued by the willingness of the French and Belgian governments to stand behind it.
"Seeing Dexia in trouble again was a real shock," said one banker. "If they are struggling now then there will be others out there in a similarly bad way."