Moody’s downgrades a number of UK providers

Moody's did this because it felt the UK government was less likely to support some providers if they got into trouble.

A statement from Moody's said: "Moody's Investors Service has today downgraded the senior debt and deposit ratings of 12 UK financial institutions and confirmed the ratings of one institution.

"The downgrades have been caused by Moody's reassessment of the support environment in the UK which has resulted in the removal of systemic support for seven smaller institutions and the reduction of systemic support... for five larger, more systemically important financial institutions."

The providers affected by the downgrade are RBS, Lloyds TSB, Santander’s UK business, Nationwide Building Society, Co-operative Bank, and the building societies Newcastle, Norwich & Peterborough, Nottingham, Principality, Skipton, West Bromwich and Yorkshire. Clydesdale’s rating was reaffirmed.

Commenting on the move, George Osborne told the BBC: "One of the reasons they're doing this is because they think the British government is actually moving in the direction of trying to get away from guaranteeing all the largest banks in Britain.

"People ask me how are you going to avoid Britain and the British taxpayer bailing out banks in the future? This government is taking steps to do that.

"Therefore credit rating agencies and others will say, well actually these banks have got to show they can pay their way in the world."

The government remains confident that British banks are well-capitalised and are not at risk.