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7 October 2011 Last updated at 07:19 GMT
Shares in Royal Bank of Scotland have opened sharply down following the downgrade Moody's has downgraded the credit rating of 12 UK financial firms including Lloyds, RBS, Nationwide, and Santander.Moody's said it now believed the UK government was less likely to support some firms if they got into trouble.
However, the firm emphasised that the downgrades did not "reflect a deterioration in the financial strength of the banking system".
The news sent bank shares lower, with RBS 3.8% off and Lloyds 3.36% down.
