Moody’s has changed the outlook on the UK banking system from stable to negative and has changed the outlook for 12 banks and building societies following Brexit.
The ratings agency says that the UK’s decision to leave the EU will impact the outlook for the banks.
Moody’s has changed the rating on Barclays, HSBC Bank, Santander UK, Coventry Building Society, Leeds Building Society, Nationwide Building Society, Nottingham Building Society and TSB Bank to negative from stable. It has changed Lloyds Bank and Principality Building Society’s ratings from positive to stable.
The outlook for Royal Bank of Scotland Group plc, Skipton Building Society, West Bromwich Building Society and Yorkshire Building Society were maintained.
“We expect lower economic growth and heightened uncertainty over the UK’s future trade relationship with the EU to lead to reduced demand for credit, higher credit losses and more volatile wholesale funding conditions for UK 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 UK banking system to negative from stable,” says Laurie Mayers, an associate managing director at Moody’s.
The decision follows the move by Moody’s to downgrade the UK’s sovereign rating to negative from stable, and the move by S&P and Fitch to downgrade the UK‘s credit rating.