S&P Lowers Long-Term Credit Ratings Of London-listed Banks

LONDON (Alliance News) - Standard & Poor's Tuesday cut its long-term credit ratings on a number of European lenders, including Barclays PLC, HSBC, Lloyds Banking Group, Royal Bank of Scotland Group PLC and Standard Chartered PLC, all of which are listed in London, because the ratings agency thinks state aid in the event of a crisis is now unlikely due to measures taken by European and domestic authorities.

S&P downgraded the long-term credit ratings of Barclays and Lloyds to BBB from A-, while RBS' long-term credit rating was downgraded by two notches to BBB-. HSBC's long-term credit rating was lowered to A from A+, while Standard Chartered's was downgraded to A- from A.

That said, S&P improved its outlook for Barclays to Stable from Negative, and bumped Lloyds up to Positive from Negative.

HSBC was given a Stable outlook from Negative, as were RBS and Standard Chartered.

The ratings agency also lowered its short-term rating on RBS to A-3 from A-2, while the short-term rating on Standard Chartered was lowered to A-2 from A-1. It affirmed the short-term credit ratings of Barclays, HSBC and Lloyds.

"Lloyds Banking Group PLC now has a positive outlook because we continue to see an at-least one-in-three chance that we will revise upward the

unsupported group credit profile (GCP) by one notch in the next 12 months," S&P said.

The ratings agency also expects further improvement in Lloyds' earnings and capitalization, and that its exposure to "unexpected losses not captured within the standard assumptions of our risk-adjusted capital model" may be moving into line with UK peers'.

"We could revise upward the unsupported GCP on Lloyds Banking Group PLC, and so the long-term rating, if we have greater confidence that Lloyds' gross nonperforming asset ratio will move into line with the long-term average of major UK banks, that Lloyds' loan book is no more susceptible than peers' to an unexpected downturn in the U.K. economy, and that residual tail risks related to its payment protection insurance (PPI) provisioning needs will not impair its capitalization," S&P added.

S&P said it sees "no significant upward or downward pressure" on the GCPs of Barclays, HSBC, Standard Chartered and RBS.

http://www.standardandpoors.com/prot/ratings/articles/en/us?articleType=HTML&assetID=1245380518240

By Samuel Agini; samagini@alliancenews.com; @samuelagini

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