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Rating Action:

Moody's upgrades Barclays Plc's long-term ratings to Baa2 from Baa3; outlook negative

12 Dec 2016

Upgrade prompted by changes in the group's liability structure, resulting in lower loss given failure for bondholders

London, 12 December 2016 -- Moody's Investors Service has today upgraded Barclays Plc's (Barclays) long-term issuer and senior unsecured debt ratings to Baa2 from Baa3 and the long-term deposit and senior unsecured debt ratings of the group's main operating company Barclays Bank PLC (Barclays Bank) to A1 from A2. The ratings outlook on both Barclays and Barclays Bank remains negative. Barclays Bank's baa2 standalone baseline credit assessment (BCA), its A1(cr)/Prime-1(cr) Counterparty Risk Assessments and its other long- and short term ratings were unaffected by today's rating action.

The rating upgrades were prompted by Moody's assessment that Barclays' senior unsecured and Barclays Bank's junior depositors and senior unsecured creditors face a lower loss given failure as a result of Barclays' issuance of loss-absorbing capital that has occurred to date and that Moody's expects in the near term. However, in Moody's view, negative pressures continue to weigh on Barclays Bank's standalone credit profile, which are reflected in the continuing negative ratings outlook on both Barclays and Barclays Bank.

The full list of ratings is provided at the end of this press release.

RATINGS RATIONALE

The upgrade of Barclays' senior unsecured and Barclays Bank's long-term deposit and senior unsecured debt ratings was driven by the increased volume of Barclays' senior unsecured debt and Moody's expectation of further issuance in the near term, which offer further loss absorption for these creditors.

Moody's assesses that Barclays' senior unsecured creditors face a moderate loss given failure whilst Barclays Bank's junior depositors and senior unsecured creditors will likely face an extremely low loss given failure. The assessment is based on Moody's advanced Loss Given Failure (LGF) analysis, which takes into account the group's balance sheet at the end of September 2016, the additional Barclays senior unsecured debt issuance that has occurred to date, and Moody's expectation of further issuance in the near term. This translates into a further notch of LGF uplift in the relevant ratings.

As a global systemically important bank, Barclays is required to build up a sizeable stock of Total Loss Absorbing Capacity (TLAC) and Minimum Requirement For Own Funds and Eligible Liabilities (MREL), which Moody's estimates to be of around GBP30 billion. In its third-quarter 2016 financial disclosure, Barclays has indicated issuance of at least GBP6 billion of loss-absorbing capital per annum, to meet its end-state requirements by 1 January 2022.

Moody's considers that Barclays Bank's baa2 BCA continues to be challenged by: (1) the uncertain UK operating environment following the outcome of the UK referendum and (2) the group's current sub-par profitability levels, as Barclays progresses the disposal of its large non-core asset portfolio and deals with legacy conduct and litigation issues. These challenges are reflected in the negative ratings outlook on both Barclays and Barclays Bank's credit ratings.

WHAT COULD CHANGE THE RATINGS UP/DOWN

Although the ratings outlook is negative, further significant progress in relation to the non-core run-down and/or settlement of material litigations (and assuming a manageable financial impact) could lead to upwards ratings pressure.

The BCA could be downgraded as a result of: a significant deterioration in the UK economy, a significant rise in unemployment, or a sustained decrease in house prices; failure to strengthen and stabilise returns; any additional large, unexpected losses due to control failures or litigation charges; an increase in risk appetite or leverage; or materially reduced liquidity or capital. A downgrade in the BCA would likely lead to rating downgrades.

RATINGS METHODOLOGY

The principal methodology used in these ratings was Banks published in January 2016. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.

LIST OF AFFECTED RATINGS

..Upgrades:

Issuer: Barclays Bank PLC

....LT Bank Deposits, Upgraded to A1 Negative from A2 Negative

....LT Issuer Rating, Upgraded to A1 Negative from A2 Negative

....Senior Unsecured Regular Bond/Debenture, Upgraded to A1 Negative from A2 Negative

....Senior Unsecured MTN, Upgraded to (P)A1 from (P)A2

....Senior Unsec. Shelf, Upgraded to (P)A1 from (P)A2

....LT Deposit Note/CD Program, Upgraded to (P)A1 from (P)A2

Issuer: Barclays Plc

....LT Issuer Rating, Upgraded to Baa2 Negative from Baa3 Negative

....Senior Unsecured Regular Bond/Debenture, Upgraded to Baa2 Negative from Baa3 Negative

....Senior Unsecured MTN, Upgraded to (P)Baa2 from (P)Baa3

....Senior Unsec. Shelf, Upgraded to (P)Baa2 from (P)Baa3

Issuer: Barclays Bank PLC, Australia Branch

....Senior Unsecured Regular Bond/Debenture, Upgraded to A1 Negative from A2 Negative

....Senior Unsecured MTN, Upgraded to (P)A1 from (P)A2

Issuer: Barclays Bank PLC, New York Branch

....LT Deposit Note/CD Program, Upgraded to A1 Negative from A2

Issuer: Barclays Bank PLC, Paris

....LT Bank Deposits, Upgraded to A1 Negative from A2 Negative

....Senior Unsecured MTN, Upgraded to (P)A1 from (P)A2

Issuer: Barclays Capital (Cayman), Ltd.

....Backed Senior Unsecured MTN, Upgraded to (P)A1 from (P)A2

Issuer: Barclays Financial LLC

....Backed Senior Unsecured MTN, Upgraded to (P)A1 from (P)A2

Outlook Actions:

..Issuer: Barclays Bank PLC

....Outlook Remains Negative

..Issuer: Barclays Plc

....Outlook Remains Negative

..Issuer: Barclays Bank PLC, Australia Branch

....Outlook Remains Negative

..Issuer: Barclays Bank PLC, New York Branch

....Outlook Remains Negative

..Issuer: Barclays Bank PLC, Paris

....Outlook Remains Negative

..Issuer: Barclays Capital (Cayman), Ltd.

....Outlook Remains Negative

..Issuer: Barclays Financial LLC

....Outlook Remains Negative

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.

Andrea Usai
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

No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

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