Moody's: British banking outlook remains negative

11 September 2012

Britain's banking sector is still facing an uncertain future as the country remains in the grip of a double-dip recession, a new study has indicated.

A report published today (11 September) by Moody's Investors Service has stated that the outlook for the country's financial industry remains negative due to the impact of a combination of factors.

Elisabeth Rudman, senior vice president at the credit rating agency, explained the nation's "uncertain economic prospects", coupled with the fact lenders are experiencing "pressure on profitability and downside risks for asset-quality", is the primary reason behind this downbeat outlook.

Furthermore, Moody's indicated that it expects government support for systemically-important financiers will decline in the coming months ahead of the implementation of new regulatory requirements.

However, Ms Rudman went on to say that some of these contributory issues are "partially offset" by more positive factors, such as higher capital ratios and strong business franchises, which will help lessen banks' reliance on short-term funding.

By Claire Archer

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