Moody’s said the operating environment remained negative for British banks which, themselves, were better placed in some respects than European Union rivals more directly hit by the eurozone debt crisis.
Senior vice president Elisabeth Rudman also told Reuters in an interview Moody’s would not necessarily cut British bank ratings again.
“In the UK, the banks have considerably strengthened their capital levels and liquidity levels. It means the UK banks are relatively well-placed with regards to their peers in Europe.”
“But the operating environment which they are in is extremely challenging and we think it will remain so.”
In October, Moody’s cut its ratings on part state-owned banks Lloyds and Royal Bank of Scotland, and also downgraded Spanish group Banco Santander’s Santander UK unit, Co-Operative Bank, Nationwide Building Society and seven smaller building societies.
Rudman said negative risks for British banks were rising unemployment and the possibility of an economic recession, along with the ongoing European debt crisis.
“We have a negative outlook on the system. It is similar to most banking systems in Europe and many banking systems globally ... Any kind of rise in unemployment will feed through to banks’ profitability and asset quality.”
Britain’s so-called “Big Four” banks—Barclays, HSBC, Lloyds and RBS—were due to report 2011 results in late February and early March.