Moody's downgrades Barclay's debt rating outlook
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Ratings agency Moody's downgraded Barclays Plc's 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 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.
Chairman 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 per cent to 166.63 pence at 8.07 am GMT.
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