London, 19 November 2020 -- Moody's Investors Service ("Moody's") has today affirmed the ratings and
rating assessments of Barclays PLC (Barclays) and maintained the stable
outlook on the holding company's Baa2 long-term senior unsecured
debt ratings.
"The affirmation of Barclays' ratings reflects its strong
capitalization and sound liquidity, which mitigate credit risk pressures
arising from the coronavirus-led macroeconomic slowdown,
its sizeable and confidence sensitive capital markets activities and its
weak profitability in 2020, which we anticipate will partially recover
from 2021" said Alessandro Roccati, Senior Vice President
at Moody's.
At the same time Moody's affirmed the ratings and rating assessments of
Barclays Bank PLC (Barclays Bank) including its A1 long-term Counterparty
Risk Rating and it's A1(cr) long-term Counterparty Risk Assessment
and maintained the stable outlook on the bank's A1 long-term deposit
and senior unsecured debt ratings.
The ratings of Barclays Bank UK PLC, Barclays' UK ring-fenced
entity, were not impacted by the rating action.
For a list of all affected ratings, please refer to the end of this
press release.
RATINGS RATIONALE
Barclays PLC
--RATIONALE FOR AFFIRMATION OF THE BCA AND LONG-TERM
RATINGS
The affirmation of Moody's view of Barclays' credit profile,
incorporated in a baa2 Baseline Credit Assessment (BCA) reflects its higher-than-peers
regulatory capitalization and its sound liquidity and diversified sources
of funding. These strengths mitigate pressures on its loan book
credit quality, which will likely deteriorate due to the coronavirus-induced
economic slowdown; its sizeable capital markets activities,
which are confidence sensitive and expose the firm to higher earnings
volatility than the more traditional commercial banking activities;
and its weak profitability in 2020, due to a sharp increase in credit
provisions related to revised macroeconomic scenarios and pressure on
domestic retail lending, not fully offset by strong capital markets
revenue; Moody's anticipates profitability will partially recover
from 2021, provided economies rebound, as the coronavirus
pandemic fades.
The affirmation further takes account of Moody's unchanged Loss Given
Failure (LGF) analysis in assessing the bank's existing bail-in-able
debt cushion and resulting loss severity for its different debt classes.
For senior unsecured debt, this continues to lead to no rating uplift
from the holding company's baa2 Adjusted BCA.
Moody's also maintained its assumption of a low probability of government
support for senior unsecured creditors, in case of need, resulting
in no uplift for government support included in these ratings.
--RATIONALE FOR THE STABLE OUTLOOK
The stable outlook on Barclays' senior ratings reflects Moody's
expectation that its capital, funding and liquidity will only moderately
deteriorate, due to coronavirus-led macroeconomic slowdown
despite continuing profitability pressures and a deterioration in asset
quality, which should crystallize in 2021.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Barclays' ratings could be upgraded following a sustained improvement
in its asset risk, profitability, and funding profiles translating
into an upgrade of its baa2 BCA or an improvement of the standalone credit
profile of its main subsidiary, Barclays Bank. 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.
Barclays' ratings could be downgraded following a deterioration of the
standalone credit profiles of its two main subsidiaries Barclays Bank
and Barclays Bank UK, beyond Moody's current expectations
and leading to a downgrade of its baa2 notional BCA. Barclays'
ratings could also be downgraded if Moody's were to assess a lower
degree of protection from the stock of bail-in-able liabilities,
which Moody's assesses through its advanced LGF analysis.
Barclays Bank PLC
--RATIONALE FOR AFFIRMATION OF THE BCA AND LONG-TERM
RATINGS
The affirmation of Moody's view of Barclays Bank's credit
profile and of its baa3 BCA reflects the bank's good regulatory
capitalization and high level of liquidity, which protect the bank
against unexpected market shocks. These factors mitigate risks
arising from its significant exposure to capital markets activities,
which are confidence sensitive and expose the firm to higher earnings
volatility than the more traditional commercial banking activities.
Moody's expects a moderately weaker profitability in 2021,
following buoyant capital markets revenue which more than offset higher
credit provisions in the first nine months of 2020.
The affirmation further takes account of Moody's unchanged Loss Given
Failure (LGF) analysis in assessing the bank's existing bail-in-able
debt cushion and resulting loss severity for its different debt classes.
For deposits and senior unsecured debt, this continues to lead to
three notches of rating uplift from the bank's baa2 Adjusted BCA.
Moody's also maintained its assumption of a moderate probability of government
support for junior depositors and senior unsecured creditors, in
case of need, resulting in one notch of additional rating uplift
for the bank's and its subsidiaries' as well as branches' deposit and
senior unsecured debt ratings.
-- RATIONALE FOR THE STABLE OUTLOOK
The stable outlook on Barclays Bank's ratings reflects Moody's expectation
of a stabilisation of its operating performance, funding,
liquidity and capital positions, despite an expected deterioration
in asset risk.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward rating pressure would develop if the bank were to increase profitability
to a higher level on a sustainable basis, decreased exposure to
capital markets earnings or increase earnings diversification, lower
its reliance on confidence-sensitive wholesale funding.
However, a one notch upgrade of the BCA would not lead to a ratings
upgrade, due to the loss of one notch of affiliate support (unless
the BCA of Barclays, the holding company, was also upgraded).
Downward rating pressure would develop in the case of a deterioration
in asset risk beyond Moody's current expectations; a material
deterioration in the bank's capital and liquidity positions; and
an increase in risk appetite or leverage or a material risk management
failure. However, a one notch downgrade of the bank's BCA
would not result in a ratings downgrade (unless the BCA of Barclays,
the holding company, was also downgraded). Barclays Bank's
ratings could also be downgraded following a downgrade of the BCA of Barclays,
resulting in a reduction of parental support notching to zero.
The ratings for Barclays Bank could finally 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.
LIST OF AFFECTED RATINGS
..Issuer: Barclays PLC
Affirmations:
.... Adjusted Baseline Credit Assessment,
Affirmed baa2
.... Baseline Credit Assessment, Affirmed
baa2
.... Short-term Issuer Rating (Local
Currency), Affirmed P-2
.... Long-term Issuer Rating (Local
Currency), Affirmed Baa2, Outlook Remains Stable
.... Other short-term (Local Currency),
Affirmed (P)P-2
.... Commercial Paper (Foreign Currency),
Affirmed P-2
.... Senior Unsecured MTN program (Local Currency),
Affirmed (P)Baa2
.... Subordinate MTN program (Local Currency),
Affirmed (P)Baa3
.... Pref. Stock Non-cumulative,
Affirmed Ba2 (hyb)
.... Senior Unsecured Regular Bond/Debenture,
Affirmed Baa2, Outlook Remains Stable
.... Subordinate, Affirmed Baa3
.... Senior Unsecured Shelf (Foreign Currency),
Affirmed (P)Baa2
.... Subordinate Shelf (Foreign Currency),
Affirmed (P)Baa3
Outlook Actions:
....Outlook, Remains Stable
..Issuer: Barclays Bank PLC
Affirmations:
.... Adjusted Baseline Credit Assessment,
Affirmed baa2
.... Baseline Credit Assessment, Affirmed
baa3
.... Long-term Counterparty Risk Assessment,
Affirmed A1(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A1
.... Short-term Counterparty Risk Rating,
Affirmed P-1
.... Long-term Issuer Rating,
Affirmed A1, Outlook Remains Stable
.... Short-term Bank Deposits,
Affirmed P-1
.... Long-term Bank Deposits,
Affirmed A1, Outlook Remains Stable
.... Senior Unsecured Regular Bond/Debenture,
Affirmed A1, Outlook Remains Stable
.... Senior Unsecured MTN program, Affirmed
(P)A1
.... Long-term Deposit Note/CD Program
(Foreign Currency), Affirmed (P)A1
.... Backed Commercial Paper (Foreign Currency),
Affirmed P-1
.... Commercial Paper (Foreign Currency),
Affirmed P-1
.... Other Short-term, Affirmed
(P)P-1
.... Other Short-term, Affirmed
P-1
.... Subordinate MTN program (Local Currency),
Affirmed (P)Baa3
.... Pref. Stock Non-cumulative
(Foreign Currency), Affirmed Ba2 (hyb)
.... Pref. Stock, Affirmed Ba1
(hyb)
.... Junior Subordinate, Affirmed Ba1
(hyb)
.... Subordinate, Affirmed Baa3
.... Senior Unsecured Shelf (Foreign Currency),
Affirmed (P)A1
Outlook Actions:
....Outlook, Remains Stable
..Issuer: Barclays Bank PLC, Australia Branch
Affirmations:
.... Longt-term Counterparty Risk Assessment,
Affirmed A1(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A1
.... Short-term Counterparty Risk Rating,
Affirmed P-1
.... Commercial Paper (Foreign Currency),
Affirmed P-1
Outlook Actions:
....Outlook, Remains Stable
..Issuer: Barclays Bank PLC, Cayman Branch
Affirmations:
....Commercial Paper (Foreign Currency),
Affirmed P-1
No outlook assigned
..Issuer: Barclays Bank PLC, Hong Kong Branch
Affirmations:
.... Long-term Counterparty Risk Assessment,
Affirmed A1(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A1
.... Short-term Counterparty Risk Rating,
Affirmed P-1
No outlook assigned
..Issuer: Barclays Bank PLC, New York Branch
Affirmations:
.... Commercial Paper (Local Currency),
Affirmed P-1
.... Long-term Counterparty Risk Assessment,
Affirmed A1(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A1
.... Short-term Counterparty Risk Rating,
Affirmed P-1
Outlook Actions:
....Outlook, Remains Stable
..Issuer: Barclays Bank PLC, Paris Branch
Affirmations:
.... Long-term Counterparty Risk Assessment,
Affirmed A1(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A1
.... Short-term Counterparty Risk Rating,
Affirmed P-1
.... Long-term Bank Deposits,
Affirmed A1, Outlook Remains Stable
.... Short-term Bank Deposits,
Affirmed P-1
.... Senior Unsecured MTN program (Local Currency),
Affirmed (P)A1
Outlook Actions:
....Outlook, Remains Stable
..Issuer: Barclays Bank PLC, Singapore Branch
Affirmations:
.... Long-term Counterparty Risk Assessment,
Affirmed A1(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A1
.... Short-term Counterparty Risk Rating,
Affirmed P-1
No outlook assigned
..Issuer: Barclays Bank PLC, Tokyo Branch
Affirmations:
.... Long-term Counterparty Risk Assessment,
Affirmed A1(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
.... Long-term Counterparty Risk Rating,
Affirmed A1
.... Short-term Counterparty Risk Rating,
Affirmed P-1
No outlook assigned
..Issuer: Barclays Bank of Canada
Affirmations:
.... Backed Commercial Paper, Affirmed
P-1
.... Long-term Counterparty Risk Assessment,
Affirmed A1(cr)
.... Short-term Counterparty Risk Assessment,
Affirmed P-1(cr)
No outlook assigned
..Issuer: Barclays Capital (Cayman) Limited
Affirmations:
.... Backed Senior Unsecured MTN program (Foreign
Currency), Affirmed (P)A1
.... Backed Other Short-term (Foreign
Currency), Affirmed (P)P-1
.... Backed Subordinate MTN program (Foreign
Currency), Affirmed (P)Baa3
Outlook Actions:
....Outlook, Remains Stable
..Issuer: Barclays Financial LLC
Affirmations:
.... Backed Senior Unsecured MTN program (Foreign
Currency), Affirmed (P)A1
.... Backed Other Short-term (Foreign
Currency), Affirmed (P)P-1
Outlook Actions:
....Outlook, Remains Stable
..Issuer: Barclays Overseas Investment Company B.V.
Affirmations:
.... Backed Junior Subordinate (Foreign Currency),
Affirmed Ba1(hyb)
Outlook Actions:
....Outlook, Remains Stable
..Issuer: Barclays US CCP Funding LLC
Affirmations:
.... Commercial Paper (Local Currency),
Affirmed P-1
No outlook assigned
..Issuer: Barclays US Funding LLC
Affirmations:
.... Backed Commercial Paper (Local Currency),
Affirmed P-1
No outlook assigned
..Issuer: Woolwich plc
Affirmations:
.... Backed Junior Subordinate (Local Currency),
Affirmed Ba1(hyb)
.... Backed Subordinate (Local Currency),
Affirmed Baa3
Outlook Actions:
....Outlook, Remains Stable
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks Methodology
published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147865.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
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
