Global Header | Moody's
Close
Please Note
We brought you to this page based on your search query. If this isn't what you are looking for, you can continue to Search Results for ""
The maximum number of items you can export is 3,000. Please reduce your list by using the filtering tool to the left.
Close
Close
Email Research
Recipient email addresses will not be used in mailing lists or redistributed.
Recipient's
Email

Use semicolon to separate each address, limit to 20 addresses.
Enter the
characters you see
Close
Email Research
Thank you for your interest in sharing Moody's Research. You have reached the daily limit of Research email sharings.
Close
Thank you!
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
LOG IN
Don't want to see this again?
REGISTER
OR
Accept our Terms of Use to continue to Moodys.com:

PLEASE READ AND SCROLL DOWN!

By clicking “I AGREE” [at the end of this document], you indicate that you understand and intend these terms and conditions to be the legal equivalent of a signed, written contract and equally binding, and that you accept such terms and conditions as a condition of viewing any and all Moody’s inform​ation that becomes accessible to you [after clicking “I AGREE”] (the “Information”).   References herein to “Moody’s” include Moody’s Corporation, Inc. and each of its subsidiaries and affiliates.

Terms of One-Time Website Use

1.            Unless you have entered into an express written contract with Moody’s to the contrary, you agree that you have no right to use the Information in a commercial or public setting and no right to copy it, save it, print it, sell it, or publish or distribute any portion of it in any form.               

2.            You acknowledge and agree that Moody’s credit ratings: (i) are current opinions of the future relative creditworthiness of securities and address no other risk; and (ii) are not statements of current or historical fact or recommendations to purchase, hold or sell particular securities.  Moody’s credit ratings and publications are not intended for retail investors, and it would be reckless and inappropriate for retail investors to use Moody’s credit ratings and publications when making an investment decision.  No warranty, express or implied, as the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any Moody’s credit rating is given or made by Moody’s in any form whatsoever.          

3.            To the extent permitted by law, Moody’s and its directors, officers, employees, representatives, licensors and suppliers disclaim liability for: (i) any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with use of the Information; and (ii) any direct or compensatory damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud or any other type of liability that by law cannot be excluded) on the part of Moody’s or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with use of the Information.

4.            You agree to read [and be bound by] the more detailed disclosures regarding Moody’s ratings and the limitations of Moody’s liability included in the Information.     

5.            You agree that any disputes relating to this agreement or your use of the Information, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of New York and shall be subject to the exclusive jurisdiction of the courts of the State of New York located in the City and County of New York, Borough of Manhattan.​​​

I AGREE
Rating Action:

MOODY'S CONCLUDES REVIEW OF HONG KONG BANKS:

17 Dec 1998
MOODY'S CONCLUDES REVIEW OF HONG KONG BANKS: Moody's concludes its review of the Hong Kong banks placed on review for possible downgrade in September. The ratings of five banks, Hong Kong and Shanghai Banking Corporation, Hang Seng Bank, Dao Heng Bank, Shanghai Commercial Bank and Wing Lung Bank, have been confirmed. However, the financial strength ratings of both Bank of East Asia and Wing Hang Bank were downgraded, as were Bank of East Asia's long-term debt and deposit ratings. These rating actions conclude Moody's review of the Hong Kong banks.

Moody's said that its actions are based on its view that the Hong Kong economy is still vulnerable to external shocks. Weakness in domestic demand and high property prices, even after the adjustements seen over the last year, suggest that it may be some time before economic growth has returned to its recent pace. As a result, problem loans should continue to accumulate over the medium term, although at a slower pace. Under this scenario, the rating agency said that the system's non-performing loans may reach as high as 8-10%. Moody's now sees a smaller likelihood for the continuation of the region's rapid downward economic spiral, but warned that, should the decline resume, problem loans could be pushed even higher.

Nevertheless, Moody's analysts pointed out, the strong capital and especially the strong earnings of many of the Hong Kong banks will allow them to withstand both a prolonged and/or a deeper downturn without impairing capital levels. The SAR's banks are well-regulated and conservatively managed. Most loans are secured and although collateral values have fallen, the legal system allows for speedy enforcement of claims. Some banks are more vulnerable than others, particularly those that depend on time deposits for a large portion of their funding and banks that have opted to lend out a larger proportion of assets. Ratings and ratings outlooks were adjusted accordingly.




The following ratings were affected:


Bank of East Asia's (BEA) long term foreign currency debt and deposit ratings were downgraded from A3 to Baa1, its long term local currency deposits from A3 to Baa1, and its bank financial strength rating from C to D+ . These downgrades reflect BEA's above average (for a Hong Kong bank) risk profile. BEA is less liquid, relative to the larger sized banks in Hong Kong, and has the highest China exposure among the locally-incorporated banks. Loans comprised 64% of BEA's total assets, as compared to the more typical 50%. This naturally has left the bank less liquid than its peers, but it has not translated into the higher net interest margins that such a strategy should produce. Meanwhile, BEA's lower liquidity leaves it more vulnerable to the recent volatility of Hong Kong's interest rates. Despite being a net placer of funds in the interbank market, BEA's net interest margin dropped form 2.99% in 1996 to 2.66% for the first half of 1998. While interest rates have fallen and currency markets are calmer, the vulnerability remains and the markets cannot be relied on to remain tranquil.

With 2.4% of loans classified NPL on June 30, 1998, evidence of the bank's higher risk strategy is already appearing. BEA has some of the SAR's higher GITIC and other ITIC exposures and about 11%, rather than the usual 5%, of loans to China. We expect BEA to continue to have above average problem loans which, in combination with its below-average loan loss reserves (LLR/NPL = 68%), will keep pressure on earnings. Nevertheless, Moody's expects BEA will remain profitable as it spreads its provisions over the next couple of years, allowing it to maintain its capital ratios and keeping it firmlyinvestment grade. BEA's P-2 short term deposit rating was confirmed. BEA's rating outlook remains negative, reflecting the greater vulnerability its below-average earnings give the bank should the downward economic spiral in the region resume.


Wing Hang Bank's (WHB) bank financial strength rating was downgraded from C to D+, reflecting its somewhat higher risk profile. Although not particularly aggressive by international standards, WHB's lends out a larger portion of its deposits than most Hong Kong banks, leaving it more susceptible to high funding costs and asset quality deterioration. Nevertheless, the bank's strong capital and strong earnings combined with Bank of New York's minority stake in the bank merit maintaining its Baa1/P-2 deposit ratings. WHB's rating outlook, however, is negative reflecting its greater vulnerability should the downward economic spiral in the region resume.




The following ratings were confirmed:


The Hongkong and Shanghai Banking Corporation Limited - All ratings were confirmed. The ratings are: long-term foreign currency deposits and other senior debt rating of A3, long-term foreign currency subordinate debt rating of Baa1, long-term domestic currency deposits and other senior debt rating of A2, the domestic currency subordinated debt rating of A3, short-term foreign currency deposits and other debt of Prime-2, and financial strength rating of B. HKBK's rating outlook is stable, reflecting our view that the bank's very strong earning power and strong parent would mitigate the impact of a resumption of the region's downward economic spiral.


Hang Seng Bank - all ratings were confirmed. The ratings are: long-term foreign currency deposits of A3, short-term foreign deposits of P-2, long-term domestic currency deposits of A2, and financial strength of B. The rating outlook is stable, reflecting the bank's powerful income-generating capacity, strong capital ratios.


Dao Heng Bank - all ratings were confirmed. The ratings are: long-term foreign and local currency deposits and senior debt of A3, long-term foreign currency subordinated debt of Baa1, short-term foreign currency deposits of P-2, and financial strength of C. The rating outlook is negative, reflecting lower-than-average profitability and concerns that should conditions continue to deteriorate in Malaysia, that capital might be shifted to the Hong Leong group. DHB's relatively low risk profile gives it below average earnings, but also significantly reduces the probability of serious asset quality deterioration. Although owned by the Kwek family and related to the Malaysia's Hong Leong group, management views DHB as its crown jewel and has avoided raiding its hefty capital and reserves. NPLs are rising, but remain below average and are comfortably covered by reserves. Although the bank is acquisitive, management has demonstrated that they know what to look for in a banking partner and how to merge banking operations. Although there is nothing to warrant a downgrade, the situation in Malaysia remains a cause for concern, as does the banks below average earnings, therefore a negative outlook is recommended.


Shanghai Commercial Bank - all ratings were confirmed. The ratings are: long-term foreign currency deposits of A3, short-term foreign currency deposits of P-2, and financial strength of C. The rating outlook is stable, reflecting SCB status as one of Hong Kong's more conservatively managed banks, which is evidenced by its still low NPL and past due ratios. NPLs were less than 1% of loans as of June, despite being an active trade finance bank. Although efficiency is below-average, SCB's strong capital and cautious lending would allow it to withstand even a severe downturn with still powerful capital levels.


Wing Lung Bank - all ratings were confirmed. The ratings are: long-term foreign currency deposits of Baa1, short-term foreign currency deposits of P-2, and financial strength of C. The rating outlook is stable, reflecting WLB's conservative management and still low past due loan ratio, which was less than 1% at mid-year. WLB is liquid and has a low risk portfolio. Its China exposure is not significant. Profits have suffered from the bank's low-risk, low-margin lending, but this is keeping -- and should continue to keep -- NPLs well below average. WLB's strong capital and reserves should prove more than adequate to protect its creditors from even a severe downturn.





Moody's also concluded the review on the following related financial institutions, which were put on review for possible downgrade due to their relationships with Hongkong and Shanghai Banking Corporation:


HSBC Holdings Plc - The long term subordinated debt rating of A2 is confirmed and the rating outlook is stable.


HSBC Markets (Netherlands) B.V. - The long-term foreign currency senior debt rating of A3, long-term foreign currency subordinate debt rating of Baa1, and short-term foreign debt of Prime-1 are confirmed. The rating outlook is stable.


HSBC Markets (Bahamas) Limited - The long-term foreign currency senior debt rating of A3, long-term foreign currency subordinate debt rating of Baa1, and short-term foreign debt of Prime-1 are confirmed. The rating outlook is stable.


Hong Kong Bank of Australia - The long-term foreign currency senior debt rating of A3 is confirmed. The rating outlook is stable.



No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.

CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

​​​​
Global Footer | Moody's