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Thursday 07 July 2016 2:49 pm

Barclays, Clydesdale, HSBC, Lloyds, Santander and Nationwide Building Society all downgraded by Standard & Poor’s over Brexit fears

By: Caitlin Morrison

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Six UK banks have been downgraded by Standard & Poor's (S&P) over concerns about risks arising out of the recent vote to leave the EU.

Barclays, Clydesdale, HSBC, Lloyds, Santander UK and Nationwide Building Society have all seen their outlooks revised to negative by the ratings agency.

S&P also revised its outlook on the Royal Bank of Scotland Group from positive to stable, saying: "The stable outlooks reflect our view that RBSG's strong capital position will likely offset any materialisation of the economic risks we see for the UK banking industry."

Read more: Strong GDP estimates conceal signs of Brexit contraction

The ratings agency said it had revised its view of the trend for economic risk in the UK banking sector to negative from positive "as a result of the growing risk of adverse economic developments and economic uncertainty arising from the recent Brexit vote".

The firm said the Leave result in the UK's June 2016 referendum on EU membership has "increased the risks of adverse economic developments in the UK".

"As a result, we now see a negative trend for UK banking industry economic risk," S&P added.

"We also believe that the UK economy has now entered into a correction phase, driven by our revised expectation that imbalances will worsen as credit growth slows and real house prices contract."

Read more: Bank of England to cut interest rates next week

S&P said that this will, in conjunction with potential reduced demand for UK property from overseas buyers, affect house prices. This echoes the views of analysts commenting on the housing market earlier today. 

"Nevertheless, we do not expect significant losses in the housing sector given the much-improved underwriting standards since the financial crisis, the still low – and declining – interest rates, and low unemployment," the group added.

"In our opinion, the outcome of the Brexit vote is a seminal event, and will lead to a less predictable, stable, and effective economic policy framework in the UK," S&P said. 

"The Brexit result could lead to a deterioration of the UK's economic performance, including its large financial services sector, which is a major contributor to employment and public receipts."

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