Fitch Ratings has today affirmed its rating on Barclays Bank plc, but downgraded the outlook from stable to negative, after the firm announced its credit crunch-related writedowns.

The firm says its rating action follows today’s detailed trading update by Barclays noting that its Barclays Capital unit has recorded net writedowns of £1.3 billion in the second half in respect of asset-backed CDOs, other U.S. subprime loans, SIVs and leveraged finance positions. Nevertheless, it still reported record earnings of £1.9 billion through the first 10 months of the year.

“The write-downs announced today are substantial but can be absorbed in the context of Barclays’ strong cash generation,” says James Longsdon, senior director in Fitch’s Financial Institutions group. “The revision of Barclays’ outlook to negative reflects our concerns that the continuing expansion of Barclays Capital might expose the group to greater risks and earnings volatility, which could lead to a ratings downgrade.”