S&P downgrades UK’s banks; blames government

Leading credit ratings agencies, Standard & Poor's (S&P), has downgraded Britain's banks saying that the weak UK economy will continue to hinder the credit profile of the UK banking sector.

The credit-rating determines the cost of borrowing on international financial markets.

''We no longer classify the United Kingdom (AAA/Negative/A-1+) among the most stable and low-risk banking systems globally, S&P said in a report titled "Banking Industry Country Risk Assesssment: United Kingdom'' published yesterday in its RatingsDirect.

The government has failed to introduce proper safeguards in the wake of the global credit crisis, it said.

Placing the UK's banking system in Group 3, the rating major said this action was driven by the country's weak economic environment, the reputational damage that has been experienced by the banking industry, and the high dependence on state-support programmes.

The scale ranges from Group 1 (strongest) to Group 10 (weakest).