Royal Bank of Scotland, Barclays and Lloyds were downgraded by ratings agency Standard & Poor's on Tuesday amid fears the UK government will refuse to offer them financial support in the event of another crisis.
The Telegraph reports that the trio were among six European banks to have their ratings cut by S&P following a new EU law that will force any lender that requires financial help to slash its liabilities by 8pc. Member states had to adhere to the new rules by January 1, 2015.
S&P said it was unsure how the EU legislation may operate 'in practice, certainly while banks remain in a transitional phase of building buffers of loss-absorbing debt instruments'.
As a result it cut Barclays to BBB from A-, RBS to BBB- from BBB+ and Lloyds to BBB from A-. Standard Chartered, HSBC and Credit Suisse were also hit by downgrades.
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