The agency said that the institutions whose ratings incorporate levels of government or systemic support that it “may now deem to be too high for the evolving post-crisis environment”.
The institutions under review are Bank of Ireland, Co-Operative Bank, Coventry Building Society, Lloyds TSB Bank, Nationwide Building Society, Newcastle Building Society, Norwich & Peterborough Building Society, Nottingham Building Society, Principality Building Society, Royal Bank of Scotland, Santander UK, Skipton Building Society, West Bromwich Building Society and Yorkshire Building Society.
Moody’s said it expected to retain a high level of systemic support uplift in the ratings of larger UK institutions but a lower level of uplift in the ratings of small to medium-sized banks. The former group currently receive between two and five notches of uplift, the latter group between one and five notches.
"The reassessment is not driven by either a deterioration in the financial strength of the banking system or that of the government. It has been initiated in response to ongoing guidance from the UK authorities that banks that fail in the future should not expect capital injections from the public purse," said Elisabeth Rudman, a senior credit officer at Moody’s.
“We will also need to assess the likelihood of further developments in this area over the medium term, given the very clear determination of the UK government to put in place a resolution mechanism that can also be applied to large, complex banks," Rudman added.
