London, Oct 7 (IANS): The rating service Moody's Friday downgraded its credit ratings of 12 British banks, including state-owned Royal Bank of Scotland and Lloyds TSB.

"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 agency said in a statement.

Moody's said it chose to downgrade a dozen British banks as it believed government action had "significantly reduced the predictability of support over the medium to long-term", reported Xinhua.

Manthos Delis, senior lecturer in banking at Cass Business School believed the reaction of Moody's seems reasonable "in light of talks for not raising the burden on taxpayers even further by a potential bailout".

Moody's, or any other rating agency's main concern, should be "the strength of bank portfolios, which, for the moment, seems to be in good shape", he said.

Bank shares sharply fell after the downgrade, with Royal Bank of Scotland and Lloyds both seeing their stocks down by over 3 percent.