Barclays debt may be rated as ‘junk’

A BLOW has been dealt to turnaround efforts at Barclays after credit agency Moody’s warned it may struggle in coming years.

The agency said that Barclays’ bonds are increasingly risky for investors and raised doubts about its ability to boost profits.

Analysts also highlighted the extra costs and disruption caused by having to comply with rules designed to make the UK system safer.

They cut the bank’s credit rating to Baa3 – just one step above the rating given to highrisk ‘junk’ bonds.

Although not unexpected, the decision is a setback for chief executive Jes Staley’s strategy of selling off operations in Africa and elsewhere to focus on investment and retail banking in the US and UK.

And it comes as the bank faces a challenge from activist investor Edward Bramson, who now controls 5.2pc of its shares.