(The following statement was released by the rating agency)
MILAN/LONDON, May 16 (Fitch) Fitch Ratings has affirmed Barclays
Long-term Issuer Default Rating at 'A' with a Stable Outlook and
at 'F1'. The agency has also affirmed the bank's Viability
Rating (VR) at 'a',
Support Rating (SR) at '1' and Support Rating Floor (SRF) at
'A'. At the same
time, Fitch has affirmed the holding company Barclays plc's
ratings and all debt
ratings. A full list of rating actions is at the end of this
The rating actions on Barclays Bank have been taken in
conjunction with Fitch's
Global Trading and Universal Bank (GTUB) periodic review.
Fitch's outlook for
the industry is stable. Positive rating drivers include improved
funding, capitalisation and more streamlined businesses, all
partly driven by
regulation. Offsetting these positive drivers are substantial
regulatory uncertainty and heightened legal and operational
KEY RATING DRIVERS - IDRS, VR AND SENIOR DEBT
Barclays Bank's VR, IDRs and senior debt ratings reflect the
franchise in diversified businesses, its solid track record in
and market risk, healthy customer funding franchise, strong
and Fitch's expectation that the bank will maintain sound
capital ratios that
are in line with its global peers. The ratings also reflect
market risk exposure
through its investment banking operations and the exposure to
RATING SENSITIVITIES - IDRS, VR AND SENIOR DEBT
Barclays Bank's Long-term IDR is on Stable Outlook. Fitch
expects Barclays Bank
to concentrate on the businesses it has identified as core
during the strategy
review it completed in February 2013. This means that the bank
will continue to
operate a global investment banking business, where it has
strong market shares
in several key segments in fixed income and equities, which
expose the bank to
potentially material market risk. The performance of the bank's
banking activities inevitably oscillates, but has remained more
stable than at
many peers, and Fitch expects the bank to continue managing
related market risk
conservatively as risk-weighted assets (RWA) in investment
banking are set to
decline further by 2015. Barclays Bank's VR would come under
pressure if the
bank materially increased its investment banking risk appetite,
currently does not expect, or if it was unable to maintain
at moderate levels.
Barclays Bank's VR reflects Fitch's expectation that the bank
strong capital ratios in line with its global peers, and the VR
would come under
pressure if the bank failed to achieve its target
pro-forma end-March 2013 Basel III look-through common equity
Tier 1 (CET1)
ratio stood at 8.4%, which brings the bank more in line with its
In addition to CET1 capital, Barclays has issued USD4bn
notes, which are written down if the bank's CET1 ratio falls
below 7%. These
notes are not included in Fitch Core Capital but have been
assigned 50% equity
credit and are included in Fitch Eligible Capital.
Barclays' adjusted leverage remains somewhat higher than at its
US peers but is
at the lower end compared with most of the European GTUBs. Fitch
leverage to decline as Basel III leverage requirements are
Barclays Bank's VR benefits from its diversified business mix,
strong and well-performing domestic retail and corporate banking
its global credit card business, where profitability has been
pressure would arise if performance in these stronger businesses
VR factors in Fitch's expectation that Barclays Bank's European
business banking operations will remain a drag on the group's
loan impairment charges are likely to remain high and margins
pressure. The impact of the European operations on the bank's
remain manageable as the restructuring of the European
businesses should improve
efficiency, but the unit is unlikely to contribute materially to
The bank's wealth management unit is small relative to those at
some of its GTUB
peers, but is growing. Barclays Bank's VR is sensitive to any
structural changes in the size and relative earnings
contribution of the
non-investment banking operations.
Fitch considers Barclays Bank's liquidity positive for its VR.
liquidity pool declined to GBP141bn at end-March 2013 (2012:
GBP150bn) and cash
and deposits with central banks in the pool declined as holdings
bonds increased. Fitch considers liquidity at this level sound
given that liquid
assets cover unsecured wholesale funding due in less than one
year (GBP98bn) by
144%. Sound liquidity is also reflected in Barclays' estimated
110% Basel III
liquidity coverage ratio and the 98% loan/deposit ratio in RBB,
Banking and Wealth and Investment Management. A material
liquidity, which Fitch does currently not expect, would put the
bank's VR under
Barclays Bank's Long-term IDR is at its SRF, which means that a
downgrade of its
VR would only trigger downgrades of the IDRs if the SRF were
revised down as
KEY RATING DRIVERS - SUPPORT RATING AND SRF
The affirmations of Barclays Bank's Support Rating and SRF are
based on Fitch's
view that the probability of support from the UK authorities for
if required, remains extremely high in the near term due to the
RATING SENSITIVITIES - SUPPORT RATING AND SRF
The Support Rating and SRF are sensitive to a change in Fitch's
view of the
ability or propensity of the UK sovereign to extend full support
to the bank's
senior creditors. There is a clear political intention to
ultimately reduce the
implicit state support for systemically important banks in
Europe and the US, as
demonstrated by a series of policy and regulatory initiatives
aimed at curbing
systemic risk posed by the banking industry. This might result
in Fitch revising
SRFs downward in the medium term, although the timing and degree
of any change
would depend on developments with respect to specific
jurisdictions. Until now,
senior creditors in major global banks have been supported in
resolution legislation is developing quickly and the
implementation of creditor
"bail-in" is starting to make it look more feasible for
taxpayers and creditors
to share the burden of supporting large, complex banks.
KEY RATING DRIVERS AND SENSITIVITIES - SUBORDINATED DEBT AND
Subordinated debt and other hybrid capital, including the
notes, issued by Barclays Bank is notched down from its VR in
Fitch's assessment of each instrument's respective
non-performance and relative
loss severity risk profiles, which vary considerably. Their
primarily sensitive to any change in Barclays Bank's VRs .
KEY RATING DRIVERS AND SENSITIVITIES - HOLDING COMPANY RATING
Barclays plc's IDRs and VR are equalised with those of Barclays
Bank and reflect
its role as the bank holding company and the absence of double
end-2012 at holding company level. Fitch could notch the holding
and VR below Barclays Bank's ratings if double leverage at
increased above 120% or if the role of the holding company
changed, which Fitch
currently does not expect.
Barclays plc's SR and SRF reflect Fitch's view that support from
authorities for the holding company is possible, but cannot be
relied on. As the
SRF is 'No Floor', the holding company's Long-term IDR is driven
purely by its
VR and is therefore primarily sensitive to the same drivers as
The rating actions are as follows:
Long-term IDR: affirmed at 'A'; Outlook Stable
Short-term IDR and short-term debt: affirmed at 'F1'
Viability Rating: affirmed at 'a'
Support Rating: affirmed at '1'
Support Rating Floor: affirmed at 'A'
Senior unsecured debt: affirmed at 'A'
Market linked securities: affirmed at 'Aemr'
Government guaranteed senior long-term debt: affirmed at 'AA+'
Lower Tier 2 debt: affirmed at 'A-'
Upper Tier 2 debt: affirmed at 'BBB'
Preference shares with no constraints on coupon omission:
affirmed at 'BB+'
Other hybrid Tier 1 instruments: affirmed at 'BBB-'
Tier 2 contingent capital notes: affirmed at 'BBB-'
The rating actions have no impact on the ratings of the
bonds issued by Barclays Bank
Barclays plc (Barclays's holding company parent)
Long-term IDR: affirmed at 'A'; Outlook Stable
Short-term IDR: affirmed at 'F1'
Viability Rating: affirmed at 'a'
Support Rating: affirmed at '5'
Support Rating Floor: affirmed at 'No Floor'
Barclays US CCP Funding LLC
US Repo Notes Programme: affirmed at 'F1'
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Fitch Italia S.p.A.
V.lo Santa Maria alla Porta, 1
+44 20 3530 1225
+44 20 3530 1075
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
email@example.com; Hannah Huntly, London, Tel: +44
20 3530 1153,
Additional information is available at www.fitchratings.com.
Applicable Criteria "Global Financial Institutions Rating
Criteria" dated 15
August 2013, "Assessing and Rating Bank Subordinated and Hybrid
dated 5 December 2013, "Evaluating Corporate Governance" dated
12 December 2012
and "Rating FI Subsidiaries and Holding Companies" dated 10
August 2012 are
available on www.fitchratings.com.
Applicable Criteria and Related Research
Global Financial Institutions Rating Criteria
Assessing and Rating Bank Subordinated and Hybrid Securities
Evaluating Corporate Governance
Rating FI Subsidiaries and Holding Companies
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