London, 01 February 2009 -- Moody's Investors Service has today downgraded the long-term ratings of Barclays Bank plc ("Barclays") from Aa1 to Aa3 with a stable outlook. The Bank Financial Strength Rating (BFSR) was lowered from B to C, with a negative outlook. This concludes Moody's review of the bank's ratings initiated on 17 September 2008. At the same time, the short-term P-1 rating was affirmed. The government-backed ratings assigned to the debt instruments benefiting from UK government guarantee retain a Aaa rating. Moody's downgraded the bank's hybrid instruments by two notches, in line with the downgrade of the senior debt ratings.

The downgrades reflect Moody's expectation of potentially significant further losses at Barclays as a result of writedowns on credit market exposures as well as an increase in impairments in the UK, which could weaken profitability and capital ratios. "After incorporating these potential losses, we consider the bank's underlying economic capital and tangible common equity as average compared to other key rating factors, such as the bank's superior franchise value and market position in deposits, which merit an overall BFSR in the C range," explains Elisabeth Rudman, Vice President -- Senior Credit Officer in Moody's Financial Institutions Group. Moody's downgrade of the bank's long-term rating to Aa3 reflects the weaker BFSR, but also incorporates the rating agency's view on the long-term credit profile of Barclays -- beyond the current government support phase -- as one of the leading UK banks with a solid retail, commercial and capital market franchise. Moreover, the current rating also takes account of the very high probability of ongoing support from the Aaa-rated UK government.

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