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London, United Kingdom (4E) – After Barclays was fined for their involvement in the Libor-rigging scandal that led to the resignation of their three executives, rating agency Moody’s has downgraded the financial strength of the London-based bank rating from stable to negative.

Moody’s stated that the bank’s lucrative investment arm is at risk of breaking up amid the sudden resignation of Group Chief Executive Bob Diamond, as well as Chief Operating Officer Jerry del Missier and Chairman Marcus Agius.

In a statement released Thursday, Moody’s lowered the outlook of Barclay’s financial health, which comes before a crucial UK Parliament vote that will decide whether to call a judge to launch an investigation over the Libor rate fixing scandal.

On Tuesday, Diamond agreed to step down from his post after Agius announced that will resign after a settlement between U.S. and British authorities worth £290 million ($452.1 million), leading to the investigation on alleged practices of Barclays of deliberately manipulating interest rates.

That settlement focuses on manipulation by some Barclays traders of Libor or London Interbank Offered Rate, which is the benchmark for interest rates on loans by individuals and businesses that amount to trillions of dollars.

Parliament is scheduled to make that vote on Thursday, which will also determine if the inquiry will be favored by MPs led by Prime Minister David Cameron or by the opposition Labour Party.

The Prime Minister has already created a Treasury Select Committee aimed to investigate the scandal that placed Libor’s credibility into question. In fact, Diamond was present in that Committee inquiry on Wednesday, but had some members felt that his responses were not plausible.

The Moody’s downgrade means that the bank will have higher costs of funding. As a result, Barclays customers will have higher costs on their loans or mortgages.

Under Diamond’s term as chief executive, Barclays tried to bolster its investment banking unit by acquiring the U.S. operations of the now collapsed Lehman Brothers in 2008. After the financial crisis, British and EU regulators pushed for greater separation of the big banks’ wholesale and retail operations. 

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