Bank shares fall as Moody's downgrades 12 UK financials

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Shares in RBS and Lloyds fell today as Moody's downgraded the senior debt and deposit ratings of 12 UK financial institutions, and said it expects the government will allow some smaller institutions to fail.

The move concludes a Moody's review of the financial sector which began in May after several major UK banks received government bailout cash. Among the companies downgraded were Lloyds TSB (A1 from Aa3), Santander UK (A1 from Aa3) and RBS (A2 from Aa3). Shares in Lloyds dropped 3.2% to 35p while RBS has slipped almost 3.5% to 24p. London's FTSE was 0.3% lower shortly before 10:30am. Moody's said it had reassessed the support environment for banks, which had seen support for five large institutions reduced by between one and three notches. "Actions already taken by UK authorities...

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