Credit protection for troubled European financials remains stable

The cost of protection for European financials has remained relatively unchanged this week, despite a spate of downgrades and negative ratings actions. Abbey National released poor results today, but credit default swaps on the British bank held firm. The cost of protection for other financials, including Lloyds TSB and Credit Suisse Group, remained relatively unchanged in the face of negative rating changes.

Today, Abbey National confirmed it will suffer a loss in 2002 after a £1.9 billion profit last year. Britain's sixth biggest bank also said it expected to cut its dividend. Abbey has been troubled in recent months by rising bad debts, slumping profits and a management shake-up in July that saw the dismissal of its former chief executive, Ian Harley. In October, Abbey rejected a takeover offer from Bank of Ireland. S&P revised its outlook on Abbey to negative on Monday.

However, the cost of