UK banks downgraded
Some of the UK's biggest banks have been downgraded by ratings agency Moody's.
The ratings agency believes the government is now less likely to bail out any troubled institutions - and smaller firms in particular.
Following this, it has downgraded 12 UK financial institutions including Lloyds TSB, Santander, RBS, Nationwide and the Co-Operative Bank.
Seven smaller building societies have also been downgraded.
The downgrades are the result of a large-scale assessment by Moody's on how likely it is the UK government would financially support a particular bank or building society if it runs into trouble.
Lloyds TSB, Santander and Co-Operative Bank have all been downgraded one notch for their 'debt and deposit ratings', while Nationwide and RBS have been downgraded two notches.
Moody's says the downgrades "do not reflect a deterioration in the financial strength of the banking system or that of the government".
It believes the government is still likely to continue to offer some level of support to "systemically important financial institutions".
However, it thinks the government is "more likely now to allow smaller institutions to fail if they become financially troubled."
Despite the downgrades, Moody's still put Lloyds and RBS in the group of financial institutions that it expects will receive a high level of governmental support.
Nationwide, Santander UK and the Co-operative fall into the second group of financial firms Moody's class as having "moderate or high likelihood of support".
However, smaller building societies Newcastle, Norwich & Peterborough, Nottingham, Principality, Skipton, West Bromwich and Yorkshire are classed in the third category as "institutions with a low or no likelihood of support".
Should savers worry?
Some of the smaller building societies frequently appear in the best buy savings tables – for example West Brom, Newcastle and Yorkshire all feature in the instant access best buys paying 2.51%, 2.35% and 2.25% respectively.
Paul Richardson, an adviser with IFA Concept Financial Planning, says savers will "immediately feel more exposed on the back of this news".
"This is all about perception and the perception will only be bad," he adds.
However, he adds that people can take comfort from the government-backed Financial Services Compensation Scheme, which protects £85,000 of a person's savings per financial institution.
A financial adviser who is not tied to any financial services company (such as a bank or insurance company) and is authorised by the Financial Services Authority (FSA). They can advise on financial products to suit your circumstances. All IFAs have to give consumers the choice of paying by fees or commission and have to explain which would best suit the customer in that particular instance. Also, if commission is paid either by the client or the financial service provider recommended by the IFA, the IFA must disclose what that commission is.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.