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7 October 2011
Last updated at 03:35 ET
Moody's has downgraded the credit rating of 12 UK financial firms including Lloyds TSB, RBS, Nationwide and Santander UK.
Moody's said it now believed the UK government was less likely to support some firms if they got into trouble.
However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system".
The news sent bank shares lower, with RBS 3.8% off and Lloyds 3.4% down.
In a statement, the agency said: "Moody's Investors Service has today downgraded the senior debt and deposit ratings of 12 UK financial institutions and confirmed the ratings of one institution.
"The downgrades have been caused by Moody's reassessment of the support environment in the UK which has resulted in the removal of systemic support for seven smaller institutions and the reduction of systemic support... for five larger, more systemically important financial institutions."
The downgrades include a two-notch cut for government-controlled RBS, and a one-notch cut for Lloyds TSB, a division of part-nationalised Lloyds Banking Group.
Spanish bank Santander had its UK business downgraded by one notch, while Nationwide Building Society suffered a two-notch reduction.
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Moody's said it now believed the UK government was less likely to support some firms if they got into trouble.
However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system".
The news sent bank shares lower, with RBS 3.8% off and Lloyds 3.4% down.
In a statement, the agency said: "Moody's Investors Service has today downgraded the senior debt and deposit ratings of 12 UK financial institutions and confirmed the ratings of one institution.
"The downgrades have been caused by Moody's reassessment of the support environment in the UK which has resulted in the removal of systemic support for seven smaller institutions and the reduction of systemic support... for five larger, more systemically important financial institutions."
The downgrades include a two-notch cut for government-controlled RBS, and a one-notch cut for Lloyds TSB, a division of part-nationalised Lloyds Banking Group.
Spanish bank Santander had its UK business downgraded by one notch, while Nationwide Building Society suffered a two-notch reduction.
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