LONDON (dpa-AFX) - Rating agencies Standard & Poor's Ratings Services and Moody's Investors Service on Thursday cut their respective outlook on battered British banking giant Barclays Bank Plc (BCS, BARC.L) to 'negative' from 'stable'. The agencies noted that the immediate departure of Barclays' CEO Bob Diamond and the consequent uncertainty surrounding the firm's direction are negative for bondholders.
Diamond resigned Tuesday as chief executive and a director of the company - less than a week after the lender was fined 290 million pounds for attempting to manipulate the inter-bank lending rate.
The agencies noted that the resignation of Chairman followed a period of intense media, political, and investor scrutiny of Barclays after it agreed to pay penalties related to setting of interbank offered rates.
According to Moody's, 'the shareholder and political pressures on Barclays could lead to broader pressure on the bank to shift its business model away from investment banking and 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.'
However, S&P affirmed its 'A+/A-1' long- and short-term counterparty credit ratings on Barclays. S&P also affirmed its 'A+/A-1' ratings on 'core' subsidiaries Barclays Private Clients International Ltd. and Barclays Capital Inc. and revised the outlook on both entities to 'negative' from 'stable'.
S&P said the ratings on Barclays Bank Ireland PLC and Barclays Bank S.A. are unaffected by this rating action because their outlook on the long-term ratings is already 'negative.'
Moody's, meanwhile, backed Barclays' C-/ baa2 standalone BFSR as well as the A2 long-term and Prime-1 short-term debt ratings. The A2 senior debt and deposit rating already has a negative outlook due to Moody's expectation that the UK government will reduce its support for large UK banks over the medium term.
Moody's added that Barclays's broad and strong management team provide the firm with stability and continuity whilst a new CEO and subsequently a Chairman are appointed, and limit the scope of today's action to a change in outlook.
In London, Barclays shares are currently trading at 166.25 pence, up 0.25 pence or 0.15 percent.
In pre-market activity in the U.S., shares are currently trading at $10.43, down $0.11 or 1.04 percent.
Copyright RTT News/dpa-AFX