Moody’s edits view on 12 U.K. banks, building societies

Moody's Investors Service said it changed the outlooks on the ratings of 12 United Kingdom banks and building societies and changed the outlook on the U.K. banking system to negative from stable.

The agency changed the outlooks on the ratings of Barclays, HSBC Bank plc, Santander UK Group Holdings plc, Coventry Building Society, Leeds Building Society, Nationwide Building Society, Nottingham Building Society and TSB Bank plc to negative from stable, and the outlooks on the ratings of Lloyds Bank plc and Principality Building Society to stable from positive.

Moody’s also changed the outlook on the U.K. government guaranteed senior unsecured debt instruments of Lloyds and Barclays, as well as Bradford & Bingley plc and NRAM (No1) Ltd., to negative from stable.

These actions reflect the agency’s expectations that the June 12 vote in favor of the U.K. leaving the European Union (EU) (Aaa, stable) will reduce the profitability of these 12 U.K. banks and building societies.

"We expect lower economic growth and heightened uncertainty over the U.K.’s future trade relationship with the EU to lead to reduced demand for credit, higher credit losses and more volatile wholesale funding conditions for U.K. financial institutions. This will be negative for banks' credit fundamentals, as reflected in today's rating actions. Simultaneously, we have changed the outlook on the U.K. banking system to negative from stable," Moody’s associate managing director Laurie Mayers said in a news release.

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