Moody's downgrades Barclays' standalone rate

5 July 2012

Barclays has had its C-/baa2 standalone bank financial strength rating changed from stable to negative by Moody's.

The move raises the possibility of the lender having its credit rating cut as it continues to struggle in the aftermath of the Libor interbank lending rate scandal.

According to Moody's, the senior resignations at the group, coupled with the uncertainty about the direction the bank is going in, has led it to make the decision.

The credit rating agency observed Barclays could come under pressure from shareholders and the government to shift its current business model away from investment banking.

"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," Moody's remarked.

There are also fears about the lender's ability to replace its chairman, chief executive and chief operating officer with candidates of sufficient credibility and quality.

By Gary Cooper

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