Barclays share price: Moody’s trims bank’s outlook after Brexit vote

on Jun 29, 2016
Updated: Oct 21, 2019

Moody’s Investors Service lowered the outlook on 12 UK lenders, including Barclays (LON:BARC), in the wake of last week’s referendum on the country’s membership in the European Union. The FTSE 100 group is considered to be among the most impacted by the Brexit vote on account of its exposure to investment banking.

Barclays’ share price has continued its recovery in today’s session, having gained 3.61 percent to stand at 136.25p as of 08:39 BST. The shares are outperforming the benchmark FTSE 100 index which currently stands 1.63 percent higher at 6,240.29 points, with investors adjusting to the outcome of the EU referendum. The lender’s shares, however, remain more than 37 percent worse off in the year-to-date, as compared with a 0.06-percent dip in the Footsie.

Moody’s lowered the outlook on Barclays’ long-term debt and deposit ratings from stable to negative, while affirming all of the ratings. The move reflects the agency’s view that a prolonged period of uncertainty for the UK, expected to follow the outcome of the Brexit vote, will add to existing negative pressures on the bank’s intrinsic creditworthiness.
“We expect lower economic growth and heightened uncertainty over the UK’s future trade relationship with the EU to lead to reduced demand for credit, higher credit losses and more volatile wholesale funding conditions for UK financial institutions. This will be negative for banks’ credit fundamentals, as reflected in today’s rating actions,” Laurie Mayers, an Associate Managing Director at Moody’s, commented in the statement. “Simultaneously, we have changed the outlook on the UK banking system to negative from stable.”
The ratings agency further slashed the outlook on FTSE 100 peers Lloyds Banking Group (LON:LLOY), Royal Bank of Scotland Group (LON:RBS) and HSBC Holdings (LON:HSBA).
As of 09:03 BST, Wednesday, 29 June, Barclays share price is 135.80p.