Mood's cuts Lloyds TSB

Moody's Investors Service said it downgraded Lloyds TSB Bank plc's senior debt and deposit ratings by one notch to A2 from A1.

The agency lowered the standalone credit assessment to baa2 from baa1 within the C- standalone bank financial strength rating range.

The outlook is stable on the C-/baa2 standalone credit assessment and negative on the A2 debt and deposit ratings, reflecting Moody's medium-term view of lower systemic support for large English banks, the agency said.

The short-term Prime-1 rating was confirmed.

Moody's said the drivers for the downgrade and weakened standalone credit profile were the bank's sensitivity to the increasingly challenging operating environment in England and Europe and its high use of wholesale funding, which implies that it would be vulnerable to changes in investor sentiment towards European banks.

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