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Barclays rating hit after Diamond exit

Thursday, July 05, 2012 - 02:13

July 5 - Barclays, the troubled British bank, has had its rating changed by one agency from stable to negative, after its chief executive departs raising uncertainty over the business model. Joanne Nicholson reports

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SOUNDBITE (English) Bob Diamond, former Chief Executive of Barclays, saying: "I love Barclays, I love Barclays because of the people. That is being put on Barclays in a way that is not representative of the firm that I lve so much." Even Bob Diamond's championing of the troubled bank, when he appeared before Britain's politicians, couldn't save them from ratings agency, Moody's. The agency has switched Barclays' rating from stable to negative. It comes in the wake of the exodus of the bank's top brass over the LIBOR rigging scandal . Moody's says the departures have led to uncertainty over the direction of Barclays' - and that would be bad for bondholder's. They said the bank might shift its business model away from investment banking because of political and shareholder pressure. Paul Myners is a former British banking minister. He says a judge-led inquiry is needed into the country's banking sector. SOUNDBITE (English) Paul Myners, Former Financial Services Secretary, saying: "I don't think we know why an industry and a profession that was held in high regard for trust, integrity and prudence 30 or 40 years ago ended up where it is now. I think we do need to understand that." Barclays announced Diamond's resignation on Tuesday. He was closely followed by his right hand man Jerry Del Messier. SOUNDBITE (English) Paul Myners, Former Financial Services Secretary, saying: "Bob Diamond, had really not, as head of the investment bank, acted as a steward of that business in the way that the regulators would have expected." The chairman, Marcus Agius, is set to go too, but not before he's found successors for the outgoing executives. Moody's thinks finding a new CEO will be a struggle. Diamond spent fifteen years building up the firm's investment arm, Barclays Capital, making it a global strategic contributor. Now the bank's reputation is in doubt. It's already been proposed that British banks should ringfence their retail from their investment arms. The trouble at Barclays now means there's pressure for the bank to sell off its investment arm altogether. But many feel Barclays Capital - without the protection of a retail operation - may not be an attractive proposition. Joanne Nicholson, Reuters

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Barclays rating hit after Diamond exit

Thursday, July 05, 2012 - 02:13