Britain’s banks are in better shape as they bulk up their balance sheets and the economic outlook improves, Moody’s said today.
The credit rating agency has raised its outlook for the UK’s banking system to stable from negative in its latest report on the health of the sector. It said an “increasingly stable” economic outlook and lower-than-expected unemployment meant bank loan books were less vulnerable to defaults, while the likelihood of rock-bottom interest rates from the Bank of England would help households and businesses service their debts.
Meanwhile, the Prudential Regulation Authority — on the recommendation of the Bank’s new Financial Policy Committee — has ordered five of the UK’s eight biggest banks to raise an extra £13 billion in capital.
Moody’s believes this will put them in better shape than their European peers.
The agency still has a negative view of banks’ long-term ratings, however, as the Government takes steps to reduce the level of systemic support to the sector.
