Hot on the heels of yesterday's launch by the Bank of England of QEII (valued at £75BN),
Moody's cut its ratings on a number of British banks.
RBS was dropped by two notches from A2 to Aa3, Lloyds TSB dropped by one notch to A1 from Aa3, Santander UK, Co-operative Bank, Nationwide and seven other smaller British building societies were also dropped.
The rationale being that Moodys' is of the view that the British government may not support certain banks in the event that they face collapse.
Unsurprisingly, George Osborne stated that he has confidence in the viability of the UK's banks.
The Treasury, as it happens, is also fighting tooth and nail any attempt by the EU to force UK banks to increase their capitalisation as a result of the soon to premiere "Stress Test III".
Is the reluctance by the Treasury based on their confidence in the banks?
Errmm..no.
It is a reluctance based on pragmatism, namely that were RBS to require more capital, the Treasury would be forced to buy shares (using taxpayers' money) at around 50p (as per the agreement with RBS) compared to the current price of 23p.
The alternative would be for the government to fully nationalise RBS.
Neither option appeals to Osborne.
In other news, a certain London based financial newspaper (which heavily relies on advertising revenue from banks) is continuing to spread the rumour that there is a plan for saving the Euro and the European banking system.
However:
Learn this,
Repeat this, and
Retweet this:
THERE IS NO PLAN!!
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