S&P cuts Barclays outlook rating to negative

Ratings agency Standard and Poor’s downgraded Barclays’ long-term rating outlook to negative from stable Thursday, as the British giant struggles with the fallout over an interest rate rigging scandal. “The outlook revision reflects the resignation of Barclays CEO, Bob Diamond, on July 3, 2012,” it said in a statement. The group’s chairman Marcus Agius and chief operating officer Jerry del Missier have also resigned over the scandal. Putting the rating outlook on negative usually means it is at risk of being downgraded in the future, a move which can increase financing costs for the company affected. “The negative outlook reflects our view of the current management flux and near-term strategic uncertainty arising from the revelation of what we perceive to be certain poor business practices and weak compliance in relation to the past setting of interbank offered rates,” S&P said. Earlier Thursday, agency Moody’s downgraded the outlook on Barclays’ financial strength rating to “negative” from “stable” for the same reasons. The bank was last week fined 290 million euros ($452 million, 360 million euros) by British and U.S. regulators for the attempted rigging of the Libor and Euribor interest rates. Libor (London Interbank Offered Rate) is a flagship London instrument used as an interest benchmark throughout the world, while Euribor is the eurozone equivalent. The rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money. Diamond on Wednesday criticized “reprehensible” behavior over the scandal in his first public comments since quitting. From TheDailyStar