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Lloyds, RBS cut by Fitch on declining govt support

Lloyds, RBS cut by Fitch on declining govt support
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First Published: Thu, Oct 13 2011. 11 58 PM IST

Updated: Thu, Oct 13 2011. 11 58 PM IST
London: Lloyds Banking and Royal Bank of Scotland, two of Britain’s government-backed lenders, had their credit ratings cut by Fitch Ratings, which said the UK is less likely to provide support in future.
Lloyds’s and RBS’s long-term issue default ratings were lowered two steps to A from AA-, the ratings company said in a statement on Thursday. Fitch reduced its support rating floors—which measure the likelihood of government support—for systemically important British banks to A from AA- and A+. Chancellor of the exchequer George Osborne last week said the government is trying to move away from guaranteeing the country’s biggest banks.
Lenders are under pressure from regulators to raise capital that’s been depleted by writedowns of Greek and other European peripheral sovereign debt. Fitch follows Moody’s Investors Service, which downgraded 12 British lenders, including RBS and Lloyds on 7 October, and also cited a lessening of government support.
The government-sponsored Commission on Banking last month recommended banks insulate their consumer units from their investment banking divisions to make taxpayer support less likely in the event of a failure.
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First Published: Thu, Oct 13 2011. 11 58 PM IST
More Topics: RBS | Lloyds | Fitch | Credit Rating | default |