Outlook revised to positive from stable on Barclays Bank PLC. Outlook unchanged at stable on Barclays Bank UK PLC
London, 17 May 2019 -- Moody's Investors Service today affirmed the long-term senior unsecured
debt ratings of Barclays PLC (Barclays, the holding company) at
Baa3 and the short-term Commercial Paper ratings at P-3.
The rating agency changed the outlook to positive from stable on Barclays'
senior unsecured debt.
The rating agency also affirmed all ratings of Barclays Bank PLC (Barclays
Bank) and changed the outlook to positive from stable on the senior debt
and deposit ratings of Barclays Bank.
At the same time, the rating agency affirmed the ratings of Barclays
Bank UK PLC (Barclays Bank UK), while keeping the outlook unchanged
at stable.
The affirmation of Barclays' ratings reflects its ample liquidity
and capital above regulatory requirements which mitigate risks from large
exposure to capital markets activities and related wholesale funding and
its moderate credit risk.
The positive outlook on Barclays' senior ratings reflects Moody's
expectation that its operating performance and profitability prospects
will improve, benefiting from a significant reduction in litigation
and conduct risks. Moody's assessment of the volume of loss absorbing
debt under its Advanced Loss Given Failure analysis and of the probability
of government support have not changed.
"With large litigations settled and restructuring costs declining,
Barclays' profitability is on a path to recovery and the bank is
better positioned to mitigate against Brexit-related risks and
tail risk from its large capital markets activities," said Alessandro
Roccati, Senior Vice President at Moody's. "Capital generation
through earnings will likely be sustained and the bank's liquidity
is strong" added Roccati.
The affirmation of the ratings of Barclays Bank and the revised outlooks
to positive reflects Moody's expectation that its operating performance
will moderately improve due to improved revenues, as the recent
restructuring starts to bear fruit, and good cost control including
adjustments to variable compensation costs, to the extent necessary,
are implemented.
The affirmation of the ratings of Barclays Bank UK with stable outlooks
reflects Moody's expectation that its operating performance will
remain broadly stable over the outlook period supported by good levels
of profitability, moderate asset risk, robust capitalisation
and good funding and liquidity.
RATINGS RATIONALE
Barclays
The positive outlook on Barclays' ratings reflects the progress
the firm has made in its restructuring plan including the de-risking
of its balance sheet, its improved asset risk profile, and
its improved profitability, supported by the resolution of litigation
matters including settlements with the US Department of Justice (DOJ)
and adequacy of provisions taken against current and anticipated Payment
Protection Insurance (PPI) claims.
Moody's believes that going forward, Barclays is positioned to demonstrate
improved and more stable profitability: non-recurring charges
will likely be moderate over the next eighteen months, making the
strong core profitability of the bank's retail and commercial operations
more tangible.
The baa3 BCA of Barclays reflects: its (1) strong franchises in
UK retail, business banking and global credit cards, (2) moderate
credit risk, driven by strong loan quality, which is partly
offset by its sizeable capital markets activities which are confidence
sensitive and expose the firm to higher earnings volatility than the more
traditional commercial banking activities (3) good regulatory capitalisation;
(4) diversified funding and sound liquidity; and (5) improving profitability
from a low base.
Barclays Bank
The positive outlook on Barclays Bank's ratings reflects the progress
the firm has made in its restructuring plan including the de-risking
of its balance sheet, which will lead to higher profits and an improved
capital position.
The BCA of baa3 for Barclays Bank - the group's non-ring
fenced bank - reflects its (1) good regulatory capitalisation and
its (2) adequate funding and sound liquidity, which protect the
bank against unexpected market shocks. The bank's BCA is constrained
by (3) risks from investment banking and capital market activities,
and (4) weak historical profitability, which we expect will continue
to improve.
Barclays Bank UK
The BCA of a3 for Barclays Bank UK - the group's ring fenced bank
-- reflects its (1) moderate asset risk; (2) robust capitalisation;
(3) stable and predictable earnings from strong retail and small business
banking franchises; (4) good funding and liquidity; and (5)
limited reliance on confidence-sensitive wholesale funding and
good liquidity levels.
WHAT COULD MOVE THE RATINGS UP/DOWN
Barclays
Barclays' baa3 notional BCA could be upgraded, following an improvement
of the standalone credit profile of its main subsidiary Barclays Bank.
An upgrade of Barclays' baa3 notional BCA would likely lead to a ratings
upgrade. Barclays' ratings could also be upgraded if the group
were to issue a substantially higher amount of bail-in-able
liabilities or maintain excess financial resources at the level of the
holding company, affording greater protection to its creditors.
A rating downgrade is unlikely, given the positive outlook on the
firm's ratings. Barclays' baa3 notional BCA could be downgraded
following a deterioration of the standalone credit profiles of its two
main subsidiaries Barclays Bank and Barclays Bank UK. A lower notional
BCA would likely lead to a downgrade of Barclays' ratings. Barclays'
ratings could also be downgraded if we were to assess a lower degree of
protection from the stock of bail-in-able liabilities,
which we assess through our advanced LGF analysis.
Barclays Bank
Barclays Bank's baa3 BCA could be upgraded if the bank were to restore
its profitability on a sustainable basis. Higher capitalisation
levels, lower reliance on confidence-sensitive wholesale
funding and a reduction in the size of capital markets activities would
also be positive for the BCA. An upgrade of the BCA would likely
lead to a ratings upgrade.
A rating downgrade is unlikely, given the positive outlook on the
firm's ratings. Barclays Bank's baa3 BCA could be downgraded
in the case of (1) a deterioration in the operating environment beyond
our current expectations, (2) a material risk management failure
or increase in risk appetite or leverage, and/ or (3) a material
deterioration in the bank's liquidity or capital positions. A downgrade
of the bank's BCA would likely lead to a ratings downgrade. The
ratings for Barclays Bank could be downgraded in the case of a lower degree
of protection for its creditors from the stock of bail-in-able
debt, which we assess through its advanced LGF analysis.
Barclays Bank UK
An upgrade of Barclays Bank UK's a3 BCA could result from a much lower
asset risk, or a considerable increase in profitability and liquidity.
A higher BCA could lead to a rating upgrade. An upgrade of BB UK's
long-term deposit rating could also result from a higher stock
of bail-in-able liabilities that would provide higher protection
for the bank's junior depositors, beyond what we currently expect.
Barclays Bank UK's a3 BCA could be downgraded in case of a deterioration
in asset quality and weaker profitability, driven by Brexit uncertainties,
or lower capitalisation or a deterioration in the bank's liquidity profile.
A downgrade of the BCA would likely lead to a rating downgrade.
The rating could also be downgraded due to a reduction in the stock of
bail-in-able liabilities that would reduce the degree of
protection for junior depositors.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks published in
August 2018. Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
LIST OF AFFECTED RATINGS
..Issuer: Barclays PLC
Affirmations:
.... Adjusted Baseline Credit Assessment,
Affirmed baa3
.... Baseline Credit Assessment, Affirmed
baa3
.... Commercial Paper, Affirmed P-3
.... Long-term Issuer Rating,
Affirmed Baa3, Outlook Changed To Positive From Stable
.... Short-term Issuer Rating,
Affirmed P-3
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)Baa3
....Subordinate Medium-Term Note Program,
Affirmed (P)Ba1
....Other Short-term, Affirmed
(P)P-3
....Pref. Stock Non-cumulative
Preferred Stock, Affirmed Ba3 (hyb)
....Senior Unsecured Regular Bond/Debenture,
Affirmed Baa3, Outlook Changed To Positive From Stable
....Subordinate Regular Bond/Debenture,
Affirmed Ba1
.... Senior Unsecured Shelf, Affirmed
(P)Baa3
.... Subordinate Shelf, Affirmed (P)Ba1
..Outlook Action:
....Outlook Changed To Positive From Stable
Issuer: Barclays Bank PLC
..Affirmations:
.... Adjusted Baseline Credit Assessment,
Affirmed baa3
.... Baseline Credit Assessment, Affirmed
baa3
.... Long-term Deposit Note / CD Program,
Affirmed (P)A2
....Senior Unsecured Regular Bond/Debenture,
Affirmed A2, Outlook Changed To Positive From Stable
....Backed Commercial Paper, Affirmed
P-1
....Commercial Paper, Affirmed P-1
.... Long-term Counterparty Risk Assessment,
Affirmed A2(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A2
.... Short-term Counterparty Risk Rating,
Affirmed P-1
.... Long-term Issuer Rating,
Affirmed A2, Outlook Changed To Positive From Stable
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)A2
.... Other Short-term, Affirmed
(P)P-1
.... Other Short-term, Affirmed
P-1
....Subordinate Medium-Term Note Program,
Affirmed (P)Ba1
....Pref. Stock Non-cumulative
Preferred Stock, Affirmed Ba3 (hyb)
....Pref. Stock Preferred Stock,
Affirmed Ba2 (hyb)
....Junior Subordinated Regular Bond/Debenture,
Affirmed Ba2 (hyb)
....Subordinate Regular Bond/Debenture,
Affirmed Ba1
.... Long-term Bank Deposits,
Affirmed A2, Outlook Changed To Positive From Stable
....Short-term Bank Deposits,
Affirmed P-1
.... Senior Unsecured Shelf, Affirmed
(P)A2
..Outlook Action:
....Outlook Changed To Positive From Stable
Issuer: Barclays Bank PLC, Australia Branch
..Affirmations:
.... Commercial Paper, Affirmed P-1
.... Long-term Counterparty Risk Assessment,
Affirmed A2(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A2
.... Short-term Counterparty Risk Rating,
Affirmed P-1
..Outlook Action:
....Outlook Changed To Positive From Stable
Issuer: Barclays Bank PLC, New York Branch
..Affirmations:
.... Commercial Paper, Affirmed P-1
.... Long-term Counterparty Risk Assessment,
Affirmed A2(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A2
.... Short-term Counterparty Risk Rating,
Affirmed P-1
..Outlook Action:
....Outlook Changed To Positive From Stable
Issuer: Barclays Bank PLC, Paris Branch
..Affirmations:
.... Long-term Counterparty Risk Assessment,
Affirmed A2(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A2
.... Short-term Counterparty Risk Rating,
Affirmed P-1
....Senior Unsecured Medium-Term Note
Program, Affirmed (P)A2
.... Long-term Bank Deposits,
Affirmed A2, Outlook Changed To Positive From Stable
.... Short-term Bank Deposits,
Affirmed P-1
..Outlook Action:
....Outlook Changed To Positive From Stable
Issuer: Barclays Bank PLC, Singapore Branch
.... Commercial Paper, Affirmed P-1
.... Long-term Counterparty Risk Assessment,
Affirmed A2(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A2
.... Short-term Counterparty Risk Rating,
Affirmed P-1
..Outlook Action:
....No Outlook Assigned
Issuer: Barclays Bank PLC, Tokyo Branch
.... Commercial Paper, Affirmed P-1
.... Long-term Counterparty Risk Assessment,
Affirmed A2(cr)
.... Short-term Counterparty Risk Assessment
,Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A2
.... Short-term Counterparty Risk Rating,
Affirmed P-1
..Outlook Action:
....No Outlook Assigned
Issuer: Barclays Bank of Canada
.... Backed Commercial Paper, Affirmed
P-1
.... Long-term Counterparty Risk Assessment,
Affirmed A2(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
..Outlook Action:
....No Outlook Assigned
Issuer: Barclays Bank PLC, Hong Kong Branch
..Affirmations:
.... Commercial Paper, Affirmed P-1
.... Long-term Counterparty Risk Assessment,
Affirmed A2(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A2
.... Short-term Counterparty Risk Rating,
Affirmed P-1
..Outlook Action:
....No Outlook Assigned
..Issuer: Barclays Bank PLC, Cayman Branch
Affirmations:
.... Commercial Paper, Affirmed P-1
..Outlook Action:
....No Outlook Assigned
Issuer: Barclays Capital (Cayman) Limited
Affirmations:
....Backed Senior Unsecured Medium-Term
Note Program, Affirmed (P)A2
.... Backed Subordinate Medium-Term
Note Program, Affirmed (P)Ba1
....Backed Other Short-term,
Affirmed (P)P-1
..Outlook Action:
....Outlook Changed To Positive From Stable
Issuer: Barclays Financial LLC
Affirmations:
.... Backed Senior Unsecured Medium-Term
Note Program, Affirmed (P)A2
.... Backed Other Short-term,
Affirmed (P)P-1
..Outlook Action:
....Outlook Changed To Positive From Stable
Issuer: Barclays Overseas Investment Company B.V.
Affirmations:
....Backed Junior Subordinated Regular Bond/Debenture,
Affirmed Ba2 (hyb)
..Outlook Action:
....Outlook Changed To Positive From Stable
Issuer: Barclays US CCP Funding LLC
Affirmations:
....Commercial Paper, Affirmed P-1
..Outlook Action:
....No Outlook Assigned
Issuer: Barclays US Funding LLC
Affirmations:
.... Backed Commercial Paper, Affirmed
P-1
..Outlook Action:
....No Outlook Assigned
Issuer: Woolwich plc
Affirmations:
....Backed Junior Subordinated Regular Bond/Debenture,
Affirmed Ba2 (hyb)
.... Backed Subordinate Regular Bond/Debenture,
Affirmed Ba1
..Outlook Action:
....Outlook Changed To Positive From Stable
Issuer: Barclays Bank UK PLC
..Affirmations:
.... Adjusted Baseline Credit Assessment,
Affirmed a3
.... Baseline Credit Assessment, Affirmed
a3
.... Commercial Paper, Affirmed P-1
.... Long-term Counterparty Risk Assessment,
Affirmed Aa2(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed Aa2
.... Short-term Counterparty Risk Rating,
Affirmed P-1
.... Long-term Bank Deposits,
Affirmed A1, Outlook Remains Stable
.... Short-term Deposit Rating,
Affirmed P-1
..Outlook Action:
....Outlook Remains Stable
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain 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 certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain 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.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Alessandro Roccati
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
Client Service: 44 20 7772 5454
Ana Arsov
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service Ltd.
One Canada Square
Canary Wharf
London E14 5FA
United Kingdom
JOURNALISTS: 44 20 7772 5456
Client Service: 44 20 7772 5454
