British investment bank Barclays was downgraded from buy to hold at ABN Amro on Thursday. It was ABN's first opportunity since mid-March to publish research on Barclays, due to the British firm's bid to acquire ABN Amro (the offer failed after a consortium led by the Royal Bank of Scotland made a higher bid).
Analysts said that Barclays generates a large portion of its earnings from capital markets, wealth management, and international retail banking at the expense of a more cyclical earnings profile and a more aggressive balance sheet structure. In addition, non-interest income accounts for 61% of Barclays' total revenue. This leaves Barclays vulnerable to the cyclical slowdown in activity levels that we anticipate for corporate and retail in response to the UK banks' shift to higher borrowing costs and tighter loan standards, said ABN Amro.
After stumbling in overseas trading, BCS is down 1.4% in today's session. However, the firm has relatively little potential for further downgrades prior to this morning's move, Zacks reported just 1 buy rating on the stock, compared to 1 hold and 2 sells.