Hong Kong, December 18, 2019 -- Moody's Investors Service has affirmed Hang Seng Bank (China) Limited
(HSB China)'s A2 long-term foreign currency issuer rating
and long-term foreign and local currency deposit ratings.
The bank's Baseline Credit Assessment (BCA) remains unchanged at
baa3. The outlook on the ratings is stable.
A list of all affected ratings and assessments is provided at the end
of this press release.
RATINGS RATIONALE
Today's rating action on HSB China follows the rating action on
its parent, Hang Seng Bank Limited (HSB, Aa2 deposits with
negative outlook, a1 BCA) on 17 December 2019, in which Moody's
changed the outlook of HSB to negative. For details of rating action
on the parent, please refer to the press release: https://www.moodys.com/research/Moodys-affirms-The-Hongkong-and-Shanghai-Banking-Corp-and-Hang--PR_414471
HSB China's A2 long-term deposit ratings incorporate multiple
notches of uplift, based on Moody's assessment of a very high
level of affiliate support from its parent, in times of need.
HSB China's adjusted BCA of a2 is one notch below the parent's
a1 BCA and is resilient to downward pressure on parent's BCA assuming
a very high level of affiliate support.
Moody's does not consider China to have an operational bank resolution
regime. Moody's therefore applies a basic Loss Given Failure
approach in rating the liabilities of Chinese banks.
Moody's Preliminary Rating Assessment on HSB China's issuer and
deposits is in line with the bank's Adjusted BCA. HSB China's
Counterparty Risk Assessment (CRA) and Counterparty Risk Rating (CRR)
are positioned one notch higher than the Adjusted BCA.
Because of HSB China's small market share in China, Moody's does
not factor in any support from the Government of China (A1 stable) in
HSB China's issuer and deposit ratings.
WHAT COULD MOVE THE RATING UP/DOWN
Moody's could upgrade the bank's BCA, if (1) its asset quality
and profitability improves; or (2) its capital position improves
further.
But Moody's could downgrade the bank's issuer and deposit ratings,
if its BCA is downgraded or if there is material weakening in support
from its parent. Moody's could downgrade the bank's BCA if
(1) its asset quality and profitability weaken materially; or (2)
its capital position weakens significantly, or both.
In addition, a significant weakening in the operating environment,
for example, if China's economic growth moderates or corporate financial
leverage continues to increase, would also be negative for the bank's
BCA.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks Methodology
published in November 2019. Please see the Rating Methodologies
page on www.moodys.com for a copy of this methodology.
Headquartered in Shanghai, Hang Seng Bank (China) Limited reported
total assets of RMB88 billion at the end of 2018.
Hang Seng Bank Limited, with its headquarters in Hong Kong,
reported total assets of HKD1.66 trillion at 30 June 2019.
Moody's has affirmed the below ratings and rating assessments for HSB
China:
• a2 Adjusted Baseline Credit Assessment (Adjusted BCA)
• A2 long-term foreign and local currency deposit ratings;
outlook stable
• P-1 short-term foreign and local currency deposit
ratings
• A2 long-term foreign currency issuer rating; outlook
stable
• A1(cr)/P-1(cr) long/short-term Counterparty Risk
Assessment
• A1/P-1 long/short-term foreign and local currency
Counterparty Risk Rating
• The outlook on the bank is stable
The local market analyst for these ratings is Yan Li, +86 (106)
319-6561.
REGULATORY DISCLOSURES
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Moody's considers a rated entity or its agent(s) to be participating
when it maintains an overall relationship with Moody's. Unless
noted in the Regulatory Disclosures as a Non-Participating Entity,
the rated entity is participating and the rated entity or its agent(s)
generally provides Moody's with information for the purposes of
its ratings process. Please refer to www.moodys.com
for the Regulatory Disclosures for each credit rating action under the
ratings tab on the issuer/entity page and for details of Moody's
Policy for Designating Non-Participating Rated Entities.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
The first name below is the lead rating analyst for this Credit Rating
and the last name below is the person primarily responsible for approving
this Credit Rating.
Sonny Hsu, CFA
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Minyan Liu, CFA
Associate Managing Director
Financial Institutions Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077