August 5th 2014
Moody’s lowers outlook for Britain’s banking system to negative from stable. Moody’s report focuses on the UK’s six largest banks, which account for 93.6 percent of total deposits. In addition to the above regulatory framework for the banking sector, Moody’s points out that UK banks also are exposed to the costs of litigation, which can limit the profitability and erode capital of some of the country’s banks
The British multinational banking company Barclays got a lower credit rating from Moodys in june 2012. The new rating was A3 and they previously had a grade of A1.
Barclays and other banks are also under threat of lawsuits with the manipulation of the reference rate LIBOR. At the end of June 2012 Barclays was fined with 290 million pounds by British and American authorities for manipulating interest rates between 2005 and 2009. The bank was also accused on July 17th 2013 of manipulating electricity prices in California and other states, and slapped with a $453m fine by America’s Federal Energy Regulatory Commission (FERC) read article in the Economist.
The manipulation of the reference rate Libor, set by 16 international banks, could be a very costly affair for the banks. Several banks are under investigation, including Citibank, Deutsche Bank and Royal Bank of Scotland. Minimum impact on interest rates has an impact on borrowers and investors worldwide.According to estimates based on transactions the value is worth an unbelievable 800 000 billion dollars each year.
British multinational banking HSBC got a rating of Aa3 previously (Aa2).
Royal Bank of Scotland got a credit rate of Baa1 (A3).
RBS, which is owned by the British state to 82 percent, made an operating profit of 1.8 billion pounds, or 19.3 billion for the first half 2013.
HSBC Holdings Plc – the biggest UK-listed bank with strong emerging markets presence in China. Read about the HSBC scandal at Guardian here.
Royal Bank of Scotland Group Plc
Lloyds Banking Group Plc