Moody’s counters S&P report on UK bank stability

Moody’s said its ratings on British banks remained stable. The agency said strong business and financial fundamentals at banks should persist in a more uncertain operating environment. The agency added that UK banks had been able to “comfortably manage” various difficulties in the past couple of years, including the aftermath of September 11, economic crises in Argentina and Brazil, record corporate failures and difficulties with the telecommunications and insurance sectors.

“Moody’s believes the major UK banks are well equipped to deal with a potential decline in economic conditions and financial markets, and the consequent deterioration in asset quality,” said the agency in a statement.

The last point directly counters the assertion by S&P yesterday that UK banks are potentially vulnerable to a housing market fall in the UK. British house prices have risen rapidly during the past 12 months, sparking concerns that the market represents an asset bubble that could soon burst.