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Barclays bank shares slide after credit rating downgrade

The remarkable recovery in the Barclays bank share prices was halted today with news that credit rating agency Moody's has downgraded its rating on Barclays bank. The downgrade comes as the group announced it expected "significant further losses" on credit related write-downs. There is also potential for a substantial write-down on the company's property exposure where commercial property is coming more and more under the spotlight.

However, the shares are currently around 95p and considering they fell below 30p in recent times the shares have still performed remarkably well in the short term. While many investors believe the worst may be over, there is some speculation that the company will need to improve its financial ratios which could see Barclays bank eventually go to shareholders for extra funding or alternatively take up any future offer from the government.

Barclays bank has been in the spotlight for some time since the directors decided against using the last government funded bailout and instead chose to raise funds in the Middle East. The terms of the Middle East deal came under intense scrutiny as did the extra cost of raising finance, which was substantially more than what was on offer from the government. While the recent bounce in the UK banking sector has been welcomed, there may still be worse to come.

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