Now … Fitch … on UK banks …

As today morning Sky News reported … UK is at the brink of recession …
and construction activity in the UK fell at FASTEST rate on record …

Fitch sees more negative rating actions for UK banks … 2008 to be challenging year.

They see:

- a number of pressure points continue to build for major UK banks

- 2008 performance is likely to be weaker

- believe the major UK banks can absorb a reasonable level of adjustments

- further negative rating actions remain possible

- measures being taken to strengthen capital by some banks are viewed positively

- believe Barclays is likely to seek to strengthen its capital position in the near-term, possibly through issuing new equity

- considers Lloyds and HSBC as being unlikely to raise new equity at present

- earnings and particularly Fitch comprehensive income (which includes mark-to-market adjustments taken directly to equity have been and will be negatively impacted by write-downs in respect of US sub-prime and related credit exposures and the slowdown in parts of the wholesale and investment banking markets

- tighter conditions in wholesale funding markets are more likely to be a growth-constraining factor than a material drag on earnings

- sees asset quality pressures building in the UK banks’ retail and corporate loan portfolios

- believes that associated rising credit costs will be more of a 2009 and 2010 story than one for 2008

- Positive credit loss trends in retail unsecured portfolios witnessed in H2007 and into 2008 are likely to reverse at some point in 2008 or 2009 and mortgage-related losses will also face upward pressure as arrears rise from historically low levels and due to falling house prices

- In the longer term, leveraged finance exposures (both drawn and undrawn) could also become more problematic if re-financing options remain constricted

Report will be out later in the day …

Tags: downgrades, financials, Fitch, UK banks

This entry was posted on Dienstag, Juni 3rd, 2008 at 11:49 and is filed under FDAX. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.