The ratings on U.K.-based Barclays Bank PLC (Barclays) reflect its sound underlying earnings generation, strong market positions, good diversification, solid funding base, and its recent and continuing improvements in its capitalization. As part of our CreditWatch resolution, we are considering these factors in the context of the potential for an increase in Barclays' earnings volatility created by its expanded investment bank, its substantial exposure to structured credit and leveraged finance risks, significant sensitivity to the deteriorating economies of the U.K., Spain, and South Africa, as well as its rapid expansion into new markets. We consider Barclays to be of high systemic importance to the U.K. Barclays boasts a broad range of businesses which deliver favorable economic returns across the cycle,
