Moody's changes outlook on 12 UK banks following Brexit

Moody's cuts UK banking sector

Moody's changed it's outlook on 12 United Kingdom-based banks Tuesday, after the country's referendum on European Union membership.

Eight of the 12 banks, including Barclays, HSBC, Santander UK and TSB Bank, were downgraded to negative from stable. Lloyds Bank and Principality Building Society were downgraded to stable from positive. The agency also changed the outlook on the U.K. government-guaranteed senior unsecured debt instruments, as well as Bradford & Bingley and NRAM, to negative from stable.

"We expect lower economic growth and heightened uncertainty over the U.K.'s future trade relationship with the EU to lead to reduced demand for credit, higher credit losses and more volatile wholesale funding conditions for U.K. financial institutions. This will be negative for banks' credit fundamentals, as reflected in today's rating actions. Simultaneously, we have changed the outlook on the U.K. banking system to negative from stable," Laurie Mayers, associate managing director at Moody's, said in a statement.

The U.K. shocked the world last week when it voted in favor of leaving the EU, sending financial markets across the globe into a frenzy. Since the Brexit referendum, European banks have fallen about 20 percent.

Moody's said it expects a "high degree" of uncertainty after the vote regarding the U.K.'s trade relationship with the EU, adding it will lead to "lower GDP growth over the next two years, in response to diminished confidence and lower spending and investment."