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Alliance & Leicester Dowgraded by Moody's

As the title suggests, Alliance and Leicester have been downgraded to E+ by Moody's as reported on Newsnight this evening. Anyone else catch that?

One of many links, not BBC related, can be found here
http://www.citywire.co.uk/personal/-/news/markets-companies-and-funds/content.aspx?ID=336800

Comments

  • Comments (16)

    Ian Phillips

    14:46 | 15 Apr 2009

    Aren't Moody's the "twonks" that rated the Toxic Debt that put us in this mess in the first place?

    yep, santandar is probably better then any of our banks afaik. Worst thing I heard about them was they increased their stake in a usa bank
  • Andrew64
    Andrew64 Posts: 425 Forumite
    edited 16 April 2009 at 6:52AM
    Not only A&L and Abbey! It also looks like just about every large building society in Britain has been downgraded. I've been told that some have even gone down by 4 levels. Perhaps someone can clarify that?

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/5160451/Moodys-slashed-mutuals-ratings-in-mass-downgrade.html

    Moody's slashed mutuals' ratings in mass downgrade

    Nine of Britain's biggest building societies, holding billions of pounds of customer deposits between them, have had their credit ratings cut to near "junk" status.
  • Andrew64
    Andrew64 Posts: 425 Forumite
    Here's some more info. E+ sounds like 'junk' to me!

    http://www.guardian.co.uk/money/2009/apr/15/building-societies-downgraded

    "In a shock warning that the sector is heading for potentially massive losses from the housing market crash, Chelsea Building Society, which has around half-a-million savers and 90,000 mortgage borrowers, saw its bank financial strength rating (BSFR) slide from C to E+. West Bromwich, the seventh largest society with £9.6bn in assets, fell from C- to E+. Britannia, Newcastle, Norwich and Peterborough, Principality, Skipton, and Yorkshire building societies were all downgraded from ratings in the C band to the riskier D band."

    "The giant of the building society sector, Nationwide, saw its rating reduced from B to C-. Moody's also reduced the rating of Alliance & Leicester to E+ from C+, despite the bank now being part of Santander."
  • Reaper
    Reaper Posts: 7,340 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    This seems to be based on continuing house price falls:
    the actions had been taken following stress-testing scenarios which incorporated a peak to trough decline in house prices of 40%
    If you believe commentators in the last few days (which the BBC has promoted heavily) the house prices falls are coming to an end. So I guess it depends on your outlook. Personally I think house prices do still have a lot further to fall and will continue to do so once spring has passed, but I may be in a minority. Those who are more confident can dismiss the rating changes on the basis their assumptions are false.
  • Andrew64 wrote: »

    Thanks for the links Andrew, some interesting reading. For us typical savers this news is probably more academic than anything, but it's a little reassuring to see the larger societies, like Nationwide, Coventry and Leeds, that stayed rated in the C band. Must be doing something right if Moody's are on a general downer elsewhere.

    As it happens, those three are where the Coleslaw family silver (what's left of it :rolleyes:) is at the moment. Wish I could claim foresight - it's more luck than judgement. :D
    Everyone needs something to believe in.

    I believe I need another beer.
  • Andrew64
    Andrew64 Posts: 425 Forumite
    As it happens, those three are where the Coleslaw family silver (what's left of it :rolleyes:) is at the moment. Wish I could claim foresight - it's more luck than judgement. :D

    Sometimes luck does matter.:)
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