Brexit fallout: Moody's cuts outlook on UK banks, insurers

Moody's Investors Service cut its outlook on the UK banking system to 'negative' from 'stable' on Tuesday, and also lowered its outlook on some UK insurers and banks, citing the negative impact of the UK's vote to leave the European Union.

"We expect lower economic growth and heightened uncertainty over the UK's future trade relationship with the EU to lead to reduced demand for credit, higher credit losses and more volatile wholesale funding conditions for UK financial institutions," Moody's said.

The ratings agency cut its outlook on some UK life insurers stating that the period of uncertainty following the Brexit will cause market volatility, weighing on insurers' capitalisation.

Aviva plc, Standard Life plc, Prudential UK and Legal & General Group plc were among the insurers downgraded.

Moody's also cut the outlooks on the ratings of 12 UK banks and building societies, citing expectations of reduced profitability after the referendum vote.

Barclays Plc, Lloyds Banking Group Plc, Royal Bank of Scotland Group Plc and Santander UK Plc were among the banks Moody's downgraded.