The ratings agency last night lowered N&P’s bank financial strength rating (BFSR) to D- from D.
Moody’s has also placed the building society’s long term deposit rating on review, according to a note on the London Stock Exchange.
N&P announced last week it has set aside £57m to cover compensation for some 3,200 customers it sold Keydata products, exceeding the building society’s previous outside estimates for the bill of £50m.
Before the Keydata provision, the company reported 2010 pre-tax profits of £5.1m, up from £1.3m in 2009. However once the cost of compensation is taken into account, this falls to an overal loss for the year £48.9m.
In the wake of the financial crisis and the backlash against leading ratings agencies which followed, Moody’s says it has placed more emphasis on near-term threats to intrinsic financial strengths and sustainability when rating banks and building societies.
Specifically, it says its focus is on the performance of capital adequacy indicators and future core earnings under different Expected-Loss scenarios for the current portfolios.
Yorkshire Building Society is currently in exclusive talks with N&P to takeover the mutual.
