A slew of UK banks have been downgraded by credit agency Standard and Poor’s (S&P).

Barclays, HSBC, Lloyds and RBS have had their ratings cut by one notch each, joining other banking behemoths in Europe and the US that were also downgraded.

Barclays is now rated A, HSBC is rated A+ while both Lloyds and RBS have been downgraded to A-.

JPMorgan, UBS, Bank of America, Goldman Sachs and Morgan Stanley were also among the firms whose ratings were cut. The downgrades come as S&P introduced a new ratings model earlier this month.

Downgrades can often increase the cost of borrowing for the banks, and add further financial strain to institutions.

Meanwhile, some of the world’s largest central banks have joined forces to prop up the global financial system, with the US Federal Reserve, the European Central Bank, the Bank of England, Bank of Japan, Bank of Canada and the Swiss National Bank among those involved.

In an attempt to relieve some of the strain from the financial system, the central banks will make it cheaper for banks to buy US dollars, as well as providing easy access to major world currencies. The programme starts on 5 December.

John Higgins, senior market economist at Capital Economics, says that while the dollar-funding programme is a boon to eurozone financial institutions, it is not a ‘game-changer’.

He adds: ‘Welcomed as the news was, we do not think it signals a turning point in the crisis. After all, the demand for dollar funding in the eurozone is symptomatic of a broader liquidity squeeze.

‘And even if banks in the eurozone have less of a liquidity problem on their hands today than they did in late 2008, they have a greater solvency problem.’

Michael Hewson, market analyst at CMC Markets, says the announcement sent European markets to ‘their highest levels in three weeks and near the monthly opening levels’.