Monday 24 August 2009

Moody's downgrades HSBC Middle East

Moody's said on Monday it downgraded the rating of HSBC's Middle Eastern banking unit, citing pressure on the lender's asset quality and profitability in the region, especially the United Arab Emirates.

The ratings agency said in a statement it downgraded the bank's financial strength rating to C from C+ and its long-term local currency debt rating and foreign currency deposit and debt ratings to Aa3 from Aa2.

Moody's said it expects HSBC's Middle Eastern division to "encounter pressure on its asset quality and profitability in the countries in which it operates and especially in the United Arab Emirates, which accounts for the majority (around 70%) of the bank's operations."

The downgrade also takes into account the recent deterioration in the bank's loan book, both in its corporate loans and in its weakening retail banking exposures, according to the statement.

Moody's added it doesn't expect any further downgrades for HSBC Middle East in the next 12 to 18 months.END

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