• Change reflects negative credit implications of finalisation of UK resolution and bail in regime and regulated ring fencing frame work
  • UK banks continued exposure to both conduct and litigation charges and to other costs that might constrain profitability

“The key driver of the change in outlook to negative for the UK banking system is that the UK government is now able to finalise the secondary legislation to implement the structural reforms relating to the UK resolution and bail-in regime and the related ring-fencing framework” says Carlos Suarez Duarte, a Moody’s Vice President – Senior Analyst and author of the report. The UK resolution and bail-in regime and the structural ring-fencing of systemically important retail/SME deposit-taking entities are designed to prevent the use of taxpayer funds to support failed institutions and to facilitate the going-concern loss-absorption of creditors, including senior unsecured bondholders.”

Full report from Moody’s here (h/t Xin)

Pretty much a stick you can level at most banking systems at the moment. I also can’t see how bail ins are finding their way into the language as they’ve been part of the UK banking act since 2009

GBP/USD has lost a bit more from the highs but again it’s the dollar that’s doing the damage as USD/JPY knocks up to a new high at 102.66