Downgrade for UK banks raises fears of credit crunch Some of the world's biggest banks - including Barclays, HSBC and Royal Bank of Scotland - had their credit ratings downgraded last night as a result of the eurozone crisis. Moody's, one of the three largest ratings agencies, imposed the downgrades after reviewing "global capital markets banks," or those with investment banking operations. The announcement was made after US markets closed because most of the affected banks were American. Separately, Spain said its banks would need €51bn to €62bn of extra capital to weather a serious downturn as it prepares to ask for aid from other eurozone nations. The central bank in Madrid said Spain's problems were limited to a small group of lenders and its biggest banks would not need extra capital. Moody's downgrades came amid fears that the euro crisis will prompt another credit crunch by making banks afraid of lending to each other, or to anyone else. The British Government has made billions of pounds of cheap credit available to UK banks. Other banks reviewed by Moody's included the US firms JPMorgan, Goldman Sachs, Morgan Stanley and Citibank, along with BNP Paribas and Société Générale from France, Deutsche Bank of Germany and the Swiss investment banks UBS and Credit Suisse. The rival agencies Fitch and Standard & Poor's had already undertaken similar reviews. The review process looked at the way bank ratings are calculated, the impact of the crisis on their creditworthiness and what this means for their financial strength. A credit rating is usually expressed as a grade. At Moody's, anything from Aaa to Baa3 is rated as "investment grade," with lower ratings from Ba1 to C rated as "speculative" or "junk." Fitch and Standard & Poor's use a simpler system, with AAA to BBB representing "investment grade" and anything at BB or below signifying "junk." The agencies were criticised during the financial crisis for giving high ratings to various investment vehicles linked to subprime mortgages, and for giving similarly high ratings to banks that would have collapsed without state bailouts. Ratings used to be important because they fed through into how much any rated institution paid for borrowing money. However, lenders have increasingly taken their own view. One banker said yesterday: "You have to look at this in context. The market will take its own view of a bank's creditworthiness, and what's going on in Europe is well known.