Publications
Partners
London/Sydney - Ratings agency Moody’s downgraded Barclays'
debt rating outlook to negative from stable, citing the resignations of senior
executives including Chief Executive Bob Diamond in the wake of an interest
rate-rigging scandal.
Moody’s said on Thursday the downgrade reflected concerns
that the departures and the consequent uncertainty surrounding the bank’s
direction would be negative for bondholders.
The ratings agency said shareholder and political pressure
on Barclays, the parent company of Absa Group [JSE:ASA], could lead to pressure on the bank to shift its business model away
from investment banking and to reform perceived failures in its business
culture.
"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 said in a statement.
Barclays announced Diamond's resignation on Tuesday and his
departure was followed hours later by that of Chief Operating Officer Jerry del
Missier. Chairperson Marcus Agius has also announced his intention to leave
once successors are found.
Moody's said Barclays could struggle to find a suitable
candidate to step into Diamond’s shoes.
"The bank could be challenged to replace the three senior
staff and in particular find a new CEO who not only has a sufficient
understanding of the investment banking business to run Barclays, but also has the
credibility and ability to swiftly address the weaknesses that the Libor
incident revealed and stakeholders’ perceptions of the investment bank," it
said.
Moody's cut its outlook on Barclays' C-/baa2 standalone bank
financial strength rating (BFSR) to negative from stable. The C-/ baa2
standalone BFSR as well as the A2 long-term and Prime-1 short-term debt ratings
remain unchanged.
Shares in Barclays were up 0.3% to 166.63 pence at 08:07 GMT.
