Lloyds and RBS credit ratings cut by Fitch

RBS was also downgraded by Moody’s last week

13 October 2011 Last updated at 14:07
http://www.bbc.co.uk/news/business-15291559

Ratings agency Fitch has downgraded the credit ratings of two UK banks, Lloyds and Royal Bank of Scotland.

Last week, rival ratings agency Moody’s also downgraded a number of UK banks.

Fitch said the UK government was less likely to support the banks if they got into trouble.

It followed the the Independent Commission on Banking report, which said investment banks should be ring-fenced from retail banks so investment banks could be allowed to fail.

“The banking system is not only large relative to the UK economy, but there is also more advanced political will to reduce the implicit support for the country’s banks,” Fitch said in a statement.

Both Lloyds Banking Group and Royal Bank of Scotland were downgraded to an A rating from AA-.

Barclays’ rating has been placed on negative watch, meaning the agency is considering downgrading it.

Last week, Chancellor George Osborne said Moody’s downgrade was a good thing because it showed the government was dealing with the “too big to fail” problem.

Along with Standard & Poor’s and Moody’s, Fitch is one of the big three ratings agencies.

Their ratings influence heavily the amount of interest that companies and governments pay to borrow money.

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