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Moody’s downgrades Barclays outlook

Moody’s Investors Services has downgraded the outlook for Barclays to negative over concerns about senior resignations at the bank, which have included chief executive Bob Diamond.

The ratings agency claims the resignations and uncertainty are negative for bondholders.

In its outlook downgrade the agency reports that though longer-term the potential shift away from investment banking could have positive implications, the uncertainty is credit negative in the short term.

According to the agency, the bank may be challenged to replace Diamond, former chief operation officer Jerry del Missier and chairman Marcus Agius.

“Moody’s believes that these concerns are mitigated to some extent by Barclays’s broad and strong management team, which provide the firm with stability and continuity whilst a new chief executive and subsequently a chairman are appointed, and limit the scope of today’s action to a change in outlook,” it reports.

However, the ratings agency was less concerned by the Libor investigation than it was the management changes.

The ratings agency has maintained the C-/baa2 bank financial strength rating

It warned the bank could see its ratings downgraded if it were unable to put a stable management structure in place, or if current developments were to have a financial impact putting pressure on capital ratios.

The agency adds: “Given the negative outlook, any upward ratings movement is currently unlikely; however, the standalone rating could be stabilised if Barclays is restores a stable management structure.”


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