The UK’s biggest banks suffered stock market falls today after an influential credit ratings agency threatened more than 100 lenders with downgrades.
Barclays, Royal Bank of Scotland and HSBC were among 122 financial institutions to have their ratings placed under review by Moody’s, which cited difficult market conditions and the ongoing threat from the eurozone debt crisis.
Moody’s downgraded several European countries earlier this week and said the outlook for the UK’s gold-plated status had turned negative, which would have a knock-on effect on banks.
It said increased regulatory burdens, with banks being required to store more cash to protect them against future financial crises, had diminished their profitability and growth prospects.
Barclays, HSBC and RBS were all down 1% today, while Lloyds was also lower.
Confidence in the sector was also hit after French bank Societe Generale said net profit for final quarter of 2011 tumbled 89% to 100 million euros (£83.6 million) as it took further write-downs on its Greek sovereign bonds.
The report said: “While we had initially expected their standalone credit profiles to recover once the acute phase of the crisis had passed, we now view these challenges as structural features of global investment banks.”
The measures taken to shore up the banking system had helped but had not entirely eliminated the risks facing the sector, it added.