Moody's on Aug. 2 took ratings actions on 11 U.K.-based banks and building societies.
The rating agency placed on review for upgrade Lloyds Banking Group Plc's Baa1 senior unsecured debt rating, as well as Lloyds Bank Plc's A1 long-term deposit and A1 long-term senior unsecured debt ratings, and baseline credit assessment of baa1. The review for upgrade will focus on the sustainability of Lloyds' improved asset risk and profitability and stable capital position amidst expectations of a more challenging macroeconomic environment ahead, Moody's said.
Moody's upgraded Principality Building Society's long-term deposit and senior unsecured program ratings to (P)Baa2 from (P)Baa3 and baseline credit assessment to "baa2" from "baa3" and its long-term credit-risk assessment to A3(cr) from Baa1(cr). The outlook on the ratings is stable, reflecting the rating agency's that the firm will continue to reduce its legacy loan portfolio, while experiencing only a small drop in profitability.
The rating agency also downgraded Leeds Building Society's baseline credit assessment to "baa1" from "a3," and its long-term deposit and senior unsecured ratings to A3 from A2, while changing the outlook on its long-term ratings to stable from negative, among other rating actions, reflecting the building society's vulnerability with respect to its loan growth, even as it continues to maintain profitability.
Moody's also changed its outlook on the deposit ratings of Coventry Building Society, Nationwide Building Society, Nottingham Building Society, Banco Santander SA unit Santander UK Plc and Banco de Sabadell SA unit TSB Bank Plc to stable from negative, while maintaining its stable outlook on Close Brothers Ltd., West Bromwich Building Society and Yorkshire Building Society. The change in outlook shows that the deterioration in the U.K.'s operating environment is less likely to translate into reduced creditworthiness for the institutions, the rating agency said.