NOTE: On May 11, 2016, the press release was corrected as follows: In the debt list, under Barclays Bank PLC, “Other Short Term, Affirmed P-1” was added as the fifteenth line. Revised release follows.
London, 10 May 2016 -- Moody's Investors Service has today affirmed the ratings of Barclays Plc
(Barclays), the group holding company, Barclays Bank PLC (Barclays
Bank) and all affiliated companies. Barclays' senior unsecured
debt rating is Baa3/Prime-3; Barclays Bank's senior
unsecured debt and deposits ratings are A2/Prime-1 and its Baseline
Credit Assessment (BCA) is baa2. The outlook on the long term senior
unsecured and deposit ratings remains stable.
A full list of affected ratings is provided towards the end of this press
release.
RATINGS RATIONALE
"The affirmation of all ratings reflects the group's strong
franchises in UK retail and business banking and in global credit cards,
a track record of moderate asset risk, improved regulatory capital
and leverage ratios (now in line with peers'), and adequate
funding and liquidity profiles," explains Alessandro Roccati,
lead analyst for Barclays at Moody's.
"These sound credit factors help to mitigate the weak profitability
and high earnings volatility, driven by the current restructuring
and run-down of the non-core unit, the exposure to
significant litigation charges, and the decreased but still elevated
proportion of revenues and earnings from capital markets activities."
The stable outlooks on all senior unsecured and deposit ratings reflects
two distinct and opposing factors: (1) Negative pressures on the
bank's intrinsic creditworthiness largely driven by the rating agency's
view on Barclays' near-term profitability challenges,
despite improvement in its balance sheet metrics, and (2) building
positive pressures under Moody's Advanced Loss Given Failure (LGF)
analysis.
The near-term negative pressures on the bank's credit profile
derive from the rating agency's expectation of continued weak profitability,
resulting from the firm's on-going restructuring and run-down
of the non-core division, as well as potential for high litigation
charges.
"Barclays has come a long way in its continued efforts to restructure
into a simpler and more focused bank and to strengthen its balance sheet
metrics", explains Mr. Roccati. "However,
the firm will continue to face significant profitability headwinds over
the next eighteen months, driven by the accelerated rundown of the
non-core division as well as outstanding litigation risks."
Moody's expects that Barclays' weak profitability will improve
once the bank has further reduced the size of its non-core division
and successfully refocused its investment banking division. In
Moody's view, this would lead to improved profitability for
the group as a whole, providing more stable internal capital generation,
a benefit for bondholders.
The building positive pressures under Moody's Advanced Loss Given
Failure (LGF) analysis reflect the changes in the liability structure
of the group. The changes are expected to result from both the
increased issuance of senior debt from the holding company and the reduction
of Tangible Banking Assets (a result of deleveraging and run down of the
non-core division). If successfully implemented, both
of these developments would strengthen the bank's credit profile
by reducing the likely severity of loss for senior creditors at Barclays
and for senior creditors and depositors at Barclays Bank in a bank resolution.
WHAT COULD CHANGE THE RATING UP OR DOWN
Although the outlook on the ratings is stable, further significant
progress in relation to the non-core run-down and/or settlement
of material litigations (and assuming a manageable financial impact),
in addition to further issuance of subordinated debt and/or senior unsecured
holding company debt, could lead to upward ratings pressure.
Alternatively, failure to make steady progress to strengthen and
stabilize results could lead to downward pressure on ratings.
The principal methodology used in these ratings was Banks published in
January 2016. Please see the Ratings Methodologies page on www.moodys.com
for a copy of this methodology.
List of affected ratings
Affirmations:
..Issuer: Barclays Plc
.... LT Issuer Rating, Affirmed Baa3
Stable
.... ST Issuer Rating, Affirmed P-3
.... Senior Unsecured Regular Bond/Debenture,
Affirmed Baa3 Stable
.... Subordinate Regular Bond/Debenture,
Affirmed Baa3
.... Pref. Stock Non-cumulative,
Affirmed Ba2 (hyb)
.... Senior Unsecured MTN, Affirmed
(P)Baa3
.... Subordinate MTN, Affirmed (P)Baa3
.... Subordinate Shelf, Affirmed (P)Baa3
.... Senior Unsecured Shelf, Affirmed
(P)Baa3
.... Commercial Paper, Affirmed P-3
... Other Short Term, Affirmed (P)P-3
..Issuer: Barclays Bank PLC
.... LT Issuer Rating, Affirmed A2 Stable
.... LT Bank Deposits (Foreign Currency and
Local Currency), Affirmed A2 Stable
.... ST Bank Deposits (Foreign Currency and
Local Currency), Affirmed P-1
.... Senior Unsecured Regular Bond/Debenture,
Affirmed A2 Stable
.... BACKED Senior Unsecured Regular Bond/Debenture,
Affirmed Aa1 Stable
.... Junior Subordinated Regular Bond/Debenture,
Affirmed Ba1 (hyb)
.... Subordinate Regular Bond/Debenture,
Affirmed Baa3
.... Senior Unsecured MTN, Affirmed
(P)A2
.... BACKED Senior Unsecured MTN, Affirmed
(P)Aa1
.... Subordinate MTN, Affirmed (P)Baa3
.... Pref. Stock, Affirmed Ba1
(hyb)
.... Pref. Stock Non-cumulative,
Affirmed Ba2 (hyb)
.... LT Deposit Note/CD Program, Affirmed
(P)A2
.... Other Short Term, Affirmed (P)P-1
.... Other Short Term, Affirmed P-1
.... BACKED Commercial Paper, Affirmed
P-1
.... Commercial Paper, Affirmed P-1
.... Senior Unsecured Shelf, Affirmed
(P)A2
.... Adjusted Baseline Credit Assessment,
Affirmed baa2
.... Baseline Credit Assessment, Affirmed
baa2
.... Counterparty Risk Assessment, Affirmed
A1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
..Issuer: Barclays Bank of Canada
.... Counterparty Risk Assessment, Affirmed
A1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
.... BACKED Commercial Paper, Affirmed
P-1
..Issuer: Barclays Bank plc Hong Kong
.... Commercial Paper, Affirmed P-1
.... Counterparty Risk Assessment, Affirmed
A1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
..Issuer: Barclays Bank PLC, Australia Branch
.... Senior Unsecured Regular Bond/Debenture,
Affirmed A2 Stable
.... Commercial Paper, Affirmed P-1
.... Senior Unsecured MTN, Affirmed
(P)A2
.... Other Short Term, Affirmed (P)P-1
.... Counterparty Risk Assessment, Affirmed
A1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
..Issuer: Barclays Bank plc, Cayman Branch
.... Commercial Paper, Affirmed P-1
..Issuer: Barclays Bank PLC, New York Branch
.... LT Deposit Note/CD Program, Affirmed
A2
.... Commercial Paper, Affirmed P-1
.... Counterparty Risk Assessment, Affirmed
A1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
..Issuer: Barclays Bank PLC, Paris
.... LT Bank Deposits (Foreign Currency and
Local Currency), Affirmed A2 Stable
.... ST Bank Deposits (Foreign Currency and
Local Currency), Affirmed P-1
.... Senior Unsecured MTN, Affirmed
(P)A2
.... Counterparty Risk Assessment, Affirmed
A1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
..Issuer: Barclays Bank PLC, Singapore
.... Commercial Paper, Affirmed P-1
.... Counterparty Risk Assessment, Affirmed
A1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
..Issuer: Barclays Bank PLC, Tokyo
.... Commercial Paper, Affirmed P-1
.... Counterparty Risk Assessment, Affirmed
A1(cr)
.... Counterparty Risk Assessment, Affirmed
P-1(cr)
..Issuer: Barclays Capital (Cayman), Ltd.
.... BACKED Senior Unsecured MTN, Affirmed
(P)A2
.... BACKED Subordinate MTN, Affirmed
(P)Baa3
.... BACKED Other Short Term, Affirmed
(P)P-1
..Issuer: Barclays Financial LLC
.... BACKED Senior Unsecured Regular Bond/Debenture,
Affirmed A2 Stable
.... BACKED Senior Unsecured MTN, Affirmed
(P)A2
.... BACKED Other Short Term, Affirmed
(P)P-1
..Issuer: Barclays Overseas Capital Corp. B.V.
.... BACKED Senior Unsecured MTN, Affirmed
(P)A2
.... BACKED Subordinate MTN, Affirmed
(P)Baa3
.... BACKED Other Short Term, Affirmed
(P)P-1
..Issuer: Barclays Overseas Investment Company B.V.
.... BACKED Junior Subordinate, Affirmed
Ba1 (hyb)
.... BACKED Senior Unsecured MTN, Affirmed
(P)A2
.... BACKED Subordinate MTN, Affirmed
(P)Baa3
.... BACKED Other Short Term, Affirmed
(P)P-1
..Issuer: Barclays US CCP Funding LLC
.... Commercial Paper, Affirmed P-1
..Issuer: Barclays US Funding LLC
.... BACKED Commercial Paper, Affirmed
P-1
..Issuer: Woolwich plc
.... BACKED Subordinate Regular Bond/Debenture,
Affirmed Baa3
.... BACKED Junior Subordinated Regular Bond/Debenture,
Affirmed Ba1 (hyb)
.... Senior Unsecured MTN, Affirmed
(P)A2
.... Subordinate MTN, Affirmed (P)Baa3
Outlook Actions:
..Issuer: Barclays Plc
....Outlook, Remains Stable
..Issuer: Barclays Bank PLC
....Outlook, Remains Stable
..Issuer: Barclays Bank PLC, Australia Branch
....Outlook, Remains Stable
..Issuer: Barclays Bank PLC, New York Branch
....Outlook, Remains Stable
..Issuer: Barclays Bank PLC, Paris
....Outlook, Remains Stable
..Issuer: Barclays Capital (Cayman), Ltd.
....Outlook, Remains Stable
..Issuer: Barclays Financial LLC
....Outlook, Remains Stable
..Issuer: Barclays Overseas Capital Corp. B.V.
....Outlook, Remains Stable
..Issuer: Barclays Overseas Investment Company B.V.
....Outlook, Remains Stable
..Issuer: Woolwich plc
....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
SUBSCRIBERS: 44 20 7772 5454
Robert Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 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
SUBSCRIBERS: 44 20 7772 5454
Moody's affirms Barclays' ratings; outlook stable
