Barclays had its credit rating cut by two notches from A1 to A3, while HSBC, Britain’s largest bank by market capitalisation, saw its rating cut one notch from Aa2 to Aa3.

RBS’s rating was also cut one-notch from A2 to A3 while Lloyds was served a one-notch cut in its rating from A1 to A2. Lloyds’s short-term funding remained unchanged, meaning the bank’s downgrade will not hurt UK borrowers.

Short-term funding is a crucial measure of a bank’s financial strength as it determines the amount of collateral it has to post with its counter-parties to maintain a trading position.

In a statement Lloyds, which is Britain’s largest retail bank, said: “We believe this change will have limited impact on our funding costs and market capacity.”
 
The cuts are part of a sweeping worldwide review of banks’ creditworthiness and follow the downgrades in recent weeks of major lenders in countries, including Spain, Italy and Germany.