Moody's raises outlook of UK banking system

The ratings firm maintains negative outlook on the long-term debt and deposit ratings of large UK banks

Moody's Investors Service raised its outlook of the UK banking system to stable, citing improving profitability and lower impairments after lenders stepped up efforts to clean up balance sheets and raise capital ratios.

Moody's increased the outlook from negative, according to an emailed statement today. The ratings firm said that it maintains a negative outlook on the long-term debt and deposit ratings of large UK banks, "reflecting its view that the UK authorities will continue to take steps to reduce the level of systemic support over the medium term."

British banks have sold assets and eliminated jobs to bolster earnings and meet tougher capital rules aimed to make them more resilient in future financial crises. Barclays Plc, Lloyds Banking Group Plc and Royal Bank of Scotland Group Plc have all said that sales of businesses and retained profits mean they won't need to raise money from equity investors.