KBRA Affirms Ratings for Barclays Bank PLC
8 Aug 2024 | Dublin
KBRA Europe (KBRA) affirms the deposit and senior unsecured debt ratings of A+ and short-term deposit and debt ratings of K1 for Barclays Bank PLC, a subsidiary of Barclays PLC (LON: BARC) (“Barclays” of "the group"), an international financial institution. The Outlook for the long-term ratings is Stable. The ratings are in support of a KBRA public finance transaction.
| This credit rating is an unsolicited credit rating | |
|---|---|
| With Rated Entity or Related Third-Party Participation | Yes |
| With Access to Internal Documents | No |
| With Access to Management | No |
Key Credit Considerations
The ratings are based on KBRA’s view that Barclays is well positioned to deliver sustainable earnings going forward. Its earnings power provides it with resources to cover extraordinary charges, such as conduct, redundancy, or restructuring-related, although KBRA does not expect the size and frequency of such charges to continue. Barclays’ diversified business model, with strong franchises in retail, commercial banking, and selected investment banking businesses in the UK and US, has proven to perform well against a challenging economic and geopolitical backdrop since the pandemic. The group's sound capitalisation, strong liquidity, and healthy asset quality also support the ratings. Barclays’ solid funding profile benefits from its strong deposit base, although there is considerable reliance on wholesale funding for investment banking operations. Asset quality is sound but likely to weaken given the high interest rate environment that negatively impacts customers’ affordability. That said, KBRA expects the deterioration to be manageable due to the group’s conservative underwriting standards and prudent provisioning levels. The ratings are constrained by a significant portion of Barclays’ earnings coming from investment banking activities which are fundamentally more volatile and can pose considerable risk management challenges.
Rating Sensitivities
A rating upgrade is not expected in the near term. However, a sustained improvement in earnings, while maintaining healthy asset quality and strong capital could facilitate positive rating momentum over time. A rating downgrade is also unlikely in the near term, though a severe and/or prolonged setback in the economic recovery or material weaknesses in risk management leading to a substantial deterioration in asset quality, earnings, or capital, may result in negative rating action. The ratings are also sensitive to the economic impact of Brexit.
To access rating and relevant documents, click here.