Moody's downgrade report hits UK banks

Shares in banks fell back after a report that the ratings agency Moody's is set to lower its ratings on Lloyds, RBS and other British banks.Sky News reported over the weekend that Moody's is awaiting the Independent Commission on Banking's (ICB) report on September 12, which is expected to recommend the imposition of robust firewalls and more stringent capital requirements. According to the news channel, Moody's executives met this week with banks to hint that they will downgrade their rating on the UK banking sector's credit worthiness after the report is released.Reuters quotes Moody's as responding to the Sky News report by saying that it has not changed its position since 2 August when it said several big British banks remain on review for a possible downgrade."As announced on 2 August, our review of UK financial institutions continues," a Moody's spokesman said. "The review is a broad reassessment of the appropriate levels of systemic support that Moody's expects going forward."At 10.40am, shares in RBS were down 8% at 22.8p, Barclays was down 8% at 152.6p and Lloyds was down 5% at 31.45p.---RG