Home > Man-Made Disasters > UK: Moody’s Cuts Credit Ratings of 12 British Banks, IMF Advisor: We May Have a Meltdown Across European Banking System in 2 or 3 Weeks

UK: Moody’s Cuts Credit Ratings of 12 British Banks, IMF Advisor: We May Have a Meltdown Across European Banking System in 2 or 3 Weeks

“Moody’s on Friday downgraded its ratings for a dozen British banks, including state-owned Royal Bank of Scotland and Lloyds TSB, due to the removal of government financial support.

Moody’s said it chose to downgrade five large banks and seven small lenders as government action had ‘significantly reduced the predictability of support over the medium to long-term.’

The downgrades did not concern HSBC, Barclays or Standard Chartered banks, the agency said. But it added that it believed Britain’s government was in the current climate more likely to allow small lenders to fail if necessary.

The announcement comes as the European Union seeks swift recapitalisation of the region’s banks to avert the spreading across borders of the eurozone debt crisis.

Friday’s downgrades could result in banks facing higher rates of interest when looking to borrow money on markets, further hindering their attempts to return to better health.

Moody’s said it had downgraded Royal Bank of Scotland and Nationwide Building Society each by two notches to A2 from Aa3; Lloyds TSB Bank and Santander UK were cut by one grade to A1 from Aa3; the Co-Operative Bank was downgraded one level to A3 from A2.” Read more.

IMF Advisor: Could See Eurozone ‘Meltdown’ in 2 Or 3 Weeks – “In an interview on the BBC (via ZeroHedge), IMF advisor Robert Shapiro said some incredibly alarmist things. He tells broadcasters that if eurozone leaders don’t address the crisis properly we will see a meltdown as soon as later this month. In his words: ‘If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system.'” Read more.

Bank of England Governor: The World is Facing the Worst Financial Crisis in History, A ‘Titanic’ Disaster for Pensioners, Savers and Workers Approaching Retirement – “‘This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances, but to act calmly to this and to do the right thing.’ Announcing its decision, the Bank said that the eurozone debt crisis was creating ‘severe strains in bank funding markets and financial markets’… Financial experts said the committee’s actions would be a ‘Titanic’ disaster for pensioners, savers and workers approaching retirement. Sir Mervyn suggested that was a price worth paying to save the economy from recession.” Read more.

Categories: Man-Made Disasters
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