Moody’s downgraded 12 UK financial institutions this (Friday) morning upon completing a review of systemic support assumptions, with the country’s main covered bond issuers lowered one or two notches.

“According to Moody’s,” announcements made, as well as actions already taken by UK authorities have significantly reduced the predictability of support over the medium to long-term,” said the rating agency.

Downgraded by one notch were: Lloyds TSB, from Aa3 to A1; Santander UK, from Aa3 to A1; and The Co-operative Bank, A2 to A3. Downgraded by two notches were: RBS, from Aa3 to A2; and Nationwide Building Society, from Aa3 to A2.

Among building societies cuts ranged from one to five notches: Newcastle was downgraded from Baa2 to Ba3; Norwich & Peterborough from Baa2 to Ba3; Nottingham from A3 to Baa2; Principality from Baa2 to Ba1; Skipton from Baa1 to Ba1; West Bromwich from Baa3 to B2; and Yorkshire from Baa1 to Baa2.

Moody’s now groups UK financial institutions into three tiers depending on the level of systemic support it believes they can expect.

A first group benefiting from very high likelihood of support and hence two to three notches of systemic uplift includes Barclays, HSBC, Lloyds and RBS. Institutions with a moderate or high likelihood of support and with one notch of systemic uplift are Nationwide, Santander UK, The Co-operative, and Clydesdale.

Financial institutions – all building societies – with low or no likelihood of support and therefore no systemic uplift are: Newcastle, Norwich & Peterborough, Nottingham, Principality, Skipton, West Bromwich and Yorkshire.

“The downgrades do not reflect a deterioration in the financial strength of the banking system or that of the government,” noted Moody’s.

In a separate but related rating action, Moody’s downgraded Leeds Building Society from A2 to A3.