British investment-banking titan Barclays was downgraded from peer perform to underperform by Bear Stearns this morning, which cited the recent credit-market chaos for its ratings cut. Specifically, Bear Stearns said, The third-quarter results reported by some of the leading U.S. investment banks last week suggested significant divergence in their ability to deal with the altered market conditions. Certain negative trends and features were common to all the banks, however, and we believe that Barclays Capital's income will also have suffered despite many years of outperformance.

The news comes on the heels of reports this morning that Dow components General Electric (GE) and American International Group (AIG) are making a lowball bid for Barclays' subprime consumer loan business, an ailing division which the banker has been eager to unload.

After suffering some losses overseas, the shares of Barclays are down more than 3% in morning activity. Thanks to its subprime exposure and the credit-market crunch, Barclays finished the month of August below its 20-month moving average for the first time since May 2005.