Standard & Poor's Says the U.K.'s Banking System Stinks

Standard & Poor's made some rather startling comments on the U.K banking system, saying they no longer classify it as among the most stable and low-risk banking systems globally.

The firm is taking this view due to the weak economic environment, the reputational damage, and high dependence on state-support.

S&P ranked the U.K. banking system at 3, in a scale that range from 1 as the strongest and 10 as the weakest.

Standard & Poor's credit analyst Nigel Greenwood stated, "In our opinion, the weak U.K. economy will continue to hinder the credit profile of the U.K. banking industry. This reflects the sharp decline in economic output and our expectation that the unwinding of the high level of debt (of the government, households, and certain industrial segments) will weigh heavily on relative economic growth prospects and banks' financial performance."

The news is impacting a number of U.K.-based banks. Barclays plc (NYseL BCS) is down 2.3%, Lloyds Banking Group plc (LYG) is down 1.2%, RBS (NYSE: RBS) is down 2.5%, ING (NYSE: ING) is down 2.8%.

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