Barclays Bank was back on the rack today after Moody's downgraded its credit ratings. The ratings agency dropped Barclays' long-term debt two notches from Aa1 to Aa3.

Barclays shares plunged last month on fears it would be nationalised, concerns that Moody's said were justified.

“Although Barclays has not taken any government capital to date, Moody's considers the systemic importance of the bank and the likelihood of receiving government support in case of need to be high,” the agency said in its statement.

It expected the bank to record ”significant further losses” on credit-related writedowns.

On top of that, Moody's said that Barclays may have to book more bad loans as the recession in the UK deepens. Such concerns outweighed Barclays' strong franchise and strong deposit base, Moody's said.

Barclays opened down 10.3p at 95.8p.

The move is a bitter blow for the bank that just a week ago was assuring investors of annual profits of £5.3 billion.

The action brings Barclays' long-term ratings in line with Fitch, which last Wednesday cut the lender by one notch to AA-minus citing the expected earnings volatility from investment banking unit Barclays Capital and deteriorating economic growth in key areas of operation.

Barclays said last week that it could absorb a 2008 writedown of £8 billion without seeking capital from private investors or the state.

But Moody's fears more writedowns and bad loans “could weaken profitability and capital ratios”.

It emerged at the weekend that Barclays had been reported to the Serious Fraud Office over allegations connected to breaches of South Africa's foreign-exchange controls.

A dossier outlining the claims was delivered to the SFO on Friday. The documents allege that the sums involved could exceed £100 million.

Barclays strenuously denies the claims.