• On 21 May 2013, Moody’s announced rating actions on MBIA Insurance Corp., National Public Finance Guarantee Corp., MBIA Inc. and other related entities. Because of the large number of credits across several asset classes affected by these rating actions, including Moody's-rated securities that are guaranteed or "wrapped" by these companies, ratings appearing on this website may not yet reflect current information. For current information on affected credits, please visit www.moodys.com/fig.
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Announcement:

Moody's changes outlook on Barclays' standalone rating to negative

Global Credit Research - 05 Jul 2012

Debt ratings unchanged at A2/P-1

London, 05 July 2012 -- Moody's Investors Service has today changed the outlook on the C-/ baa2 standalone bank financial strength rating (BFSR) of Barclays Bank plc to negative from stable. The C-/ baa2 standalone BFSR as well as the A2 long-term and Prime-1 short-term debt ratings remain unchanged. The A2 senior debt and deposit rating already has a negative outlook due to Moody's expectation that the UK government will reduce its support for large UK banks over the medium term. Today's action extends this negative outlook to Barclays' standalone BFSR rating and the bank's subordinated debt and junior capital instruments, which are notched off the standalone rating.

RATIONALE FOR NEGATIVE OUTLOOK

Moody's decision to change the outlook on Barclays's C-/ baa2 standalone rating to negative from stable reflects the rating agency's concerns that the senior resignations at the bank and the consequent uncertainty surrounding the firm's direction are negative for bondholders. Specifically, the shareholder and political pressures on Barclays, which resulted in the resignation of the bank's CEO, COO (previously the head of the investment bank) and the stated intention of the Chairman to resign, could lead to broader pressure on the bank to shift its business model away from investment banking and reform perceived failures in its business culture. Although this could have potentially positive implications over the longer term, the uncertainty surrounding such a change in direction is credit negative in the short term. In addition, Moody's believes that the bank could be challenged to replace the three senior staff and in particular find a new CEO who not only has a sufficient understanding of the investment banking business to run Barclays, but also has the credibility and ability to swiftly address the weaknesses that the LIBOR incident revealed and stakeholders' perceptions of the investment bank.

Moody's believes that these concerns are mitigated to some extent by Barclays's broad and strong management team, which provide the firm with stability and continuity whilst a new CEO and subsequently a Chairman are appointed, and limit the scope of today's action to a change in outlook.

More broadly, Moody's incorporated the investment banking industry's propensity for failures in the control environment into the rating actions taken on 15 large firms with global capital markets operations on 21 June 2012, including the two-notch downgrade of Barclays to A2 from Aa3 (please refer to "Moody's downgrades firms with global capital markets operations"). Moody's also commented on the industry-wide nature of the breakdown of controls highlighted by the ongoing investigations into the manipulation of the Libor rate in "Moody's Comments on Barclays' LIBOR Settlement", published on 29 June 2012. With Barclays' standalone rating at baa2, the bank's ratings are positioned to absorb a certain amount of volatility. Consequently it is the disruptive management changes facing Barclays, rather than the outcome of last week's LIBOR investigations, that are the key driver for today's rating action.

WHAT COULD MOVE THE RATINGS UP/DOWN

Moody's says that Barclays' senior debt and standalone ratings could experience further downward pressure if the bank proved to be unable to restore a stable management structure over the coming months; or if there are indications that the current developments were to have a financial impact sufficiently large to put pressure on capital ratios and/ or negative implications for the bank's business model.

Given the negative outlook, any upward ratings movement is currently unlikely; however, the standalone rating could be stabilised if Barclays is restores a stable management structure.

PRINCIPAL METHODOLOGIES

The principal methodology used in these ratings was Moody's Consolidated Global Bank Rating Methodology published in June 2012. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides relevant regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides relevant regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides relevant regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

The ratings have been disclosed to the rated entities or their designated agent(s) and issued with no amendment resulting from that disclosure

Information sources used to prepare each of the ratings are the following: parties involved in the ratings, public information and confidential and proprietary Moody's Investors Service information.

Moody's considers the quality of information available on the rated entities, obligations or credits satisfactory for the purposes maintaining these ratings.

Moody's adopts all necessary measures so that the information it uses in assigning the ratings is of sufficient quality and from sources Moody's considers to be reliable including, when appropriate, independent third-party sources. However, Moody's is not an auditor and cannot in every instance independently verify or validate information received in the rating process.

Moody's Investors Service may have provided Ancillary or Other Permissible Service(s) to the rated entities or their related third parties within the two years preceding the credit rating action. Please see the special report "Ancillary or other permissible services provided to entities rated by MIS's EU credit rating agencies" on the ratings disclosure page on our website www.moodys.com for further information.

Please see the ratings disclosure page on www.moodys.com for general disclosure on potential conflicts of interests.

Please see the ratings disclosure page on www.moodys.com for information on (A) MCO's major shareholders (above 5%) and for (B) further information regarding certain affiliations that may exist between directors of MCO and rated entities as well as (C) the names of entities that hold ratings from MIS that have also publicly reported to the SEC an ownership interest in MCO of more than 5%. A member of the board of directors of this rated entity may also be a member of the board of directors of a shareholder of Moody's Corporation; however, Moody's has not independently verified this matter.

Please see Moody's Rating Symbols and Definitions on the Rating Process page on www.moodys.com for further information on the meaning of each rating category and the definition of default and recovery.

Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

In addition to the information provided below please find on the ratings tab of the issuer page at www.moodys.com, for each of the ratings covered, Moody's disclosures on the lead rating analyst and the Moody's legal entity that has issued each of the ratings.

Elisabeth Rudman
Senior Vice President
Financial Institutions Group
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Johannes Wassenberg
MD - Banking
Financial Institutions Group
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454

Moody's changes outlook on Barclays' standalone rating to negative
No Related Data.

 

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