Moody’s Investors Service said yesterday it was reviewing 14 British banks — including Lloyds TSB Bank and Royal Bank of Scotland — for possible downgrade because of less government support in case of a bailout.
Moody’s said the review would reassess the level of systemic support incorporated in the ratings of UK financial institutions in order to align their ratings with changes to government support for banks now that the global financial crisis has eased.
“The reassessment is not driven by either a deterioration in the financial strength of the banking system or that of the government,” said Elisabeth Rudman, a Moody’s senior credit officer and lead analyst for a number of UK banks.
“It has been initiated in response to ongoing guidance from the UK authorities [the Bank of England, the Financial Services Authority and the Treasury] that banks that fail in the future should not expect capital injections from the public purse,” she added.
Current levels of systemic support account for two to five notches of ratings uplift for the large UK banks and one to five notches of uplift for the small to medium-sized financial institutions, Moody’s said.
However, the ratings agency said it expects to retain a high level of systemic support uplift in the senior debt ratings of the major UK banks, as it believes regulators do not have all the tools necessary to resolve such institutions without causing financial instability.
The banks whose ratings are to be reviewed for possible downgrade are: Bank of Ireland (UK) PLC, Co-Operative Bank PLC, Coventry Building Society, Lloyds TSB Bank PLC, Nationwide Building Society, Newcastle Building Society, Norwich & Peterborough Building Society, Nottingham Building Society, Principality Building Society, Royal Bank of Scotland PLCS, Santander UK PLC, Skipton Building Society, West Bromwich Building Society and Yorkshire Building Society.
Meanwhile, a Chinese ratings house yesterday downgraded Britain’s sovereign credit rating over what it said was the country’s gloomy economic growth prospects and weakening ability to pay back debt.
Dagong Global Credit Rating Co (大公國際信評) downgraded the UK’s local and foreign currency sovereign credit rating to A+ from AA- with a “negative” outlook for its solvency, it said in a statement.
The downgrade reflected “the deteriorating debt repayment capability of the UK and the difficulty in improving its sovereign credit level in a moderately long term in the future,” it said.
Uncertainties arising from the Bank of England’s future monetary policy and the impact of debt-laden European countries on the British financial system are “likely to further worsen the government’s fiscal status,” it said.
The British economy grew 1.3 percent last year and Dagong said it expected the rate to show little or no change in the coming two years, which “directly curbs the improvement of the national economic status.”
Britain’s deficit for the 2010-2011 fiscal year fell from almost 162 billion euros (US$228 billion) the previous year to just below 147 billion euros, after a swathe of cuts ordered by British Prime Minister David Cameron.
That meant the deficit was logged at 10 percent of national output, down from 11.5 percent 12 months earlier.
It is the third-highest in the EU after that of Ireland and Greece — higher than either Spain or Portugal, next in line at just above 9 percent each.
However, Britain’s cumulative national debt rose almost 20 percent year-on-year to more than 1.2 trillion euros and now accounts for 82.5 percent of GDP.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day