Hong Kong, November 16, 2018 -- Moody's Investors Service has assigned the following ratings and
rating assessments to Shanghai Pudong Development Bank Co.,
Ltd.'s (SPDB) and its branches:
• (P)Baa2/(P)P-2 local currency and foreign currency medium-term
note (MTN) Programme ratings of SPDB
• (P)Baa2/(P)P-2 local currency MTN Programme ratings of SPDB,
Hong Kong branch
• (P)Baa2/(P)P-2 local currency and foreign currency MTN Programme
ratings of SPDB, Singapore branch
• Baa2/P-2 local and foreign currency Counterparty Risk ratings
(CRRs) of SPDB, Singapore branch
• Baa2(cr)/P-2(cr) Counterparty Risk Assessment (CR Assessment)
of SPDB, Singapore branch
The USD5 billion MTN Programme was originally established by SPDB,
Hong Kong branch on 28 August 2015. Moody's has affirmed
the (P)Baa2/(P)P-2 foreign currency MTN Programme ratings on SPDB,
Hong Kong branch. The Programme now updates to include SPDB or
any branch of SPDB located in Hong Kong, Macau or Taiwan,
or any branch of SPDB located outside of China (A1, stable).
The rating outlook is stable.
RATINGS RATIONALE
The (P)Baa2/(P)P-2 ratings on the MTN Programme are the same as
SPDB's long-term and short-term deposit ratings of
Baa2/P-2.
The Notes to be issued under the MTN Programme will constitute direct,
general and unconditional obligations of the issuer which will at all
times rank pari passu among themselves and at least pari passu with all
other present and future unsubordinated and unsecured obligations of the
issuer.
SPDB's standalone Baseline Credit Assessment (BCA) is ba2.
Its Adjusted BCA, which incorporates no affiliate support,
is at the same level as its BCA.
China does not have an operational bank resolution regime. Therefore,
Moody's applies a basic Loss Given Failure approach in rating Chinese
banks.
The Preliminary Rating Assessment on its deposit ratings, representing
Moody's view of the expected loss in the absence of government support
and before considerations of debt ceilings, is at the same level
as the Adjusted BCA.
Moody's assesses that, in times of need, SPDB would
receive a very high level of Chinese government support, uplifting
the Preliminary Rating Assessment by three notches to Baa2.
The CRRs and CR Assessment of SPDB Singapore branch are consistent with
those of SPDB. They take into consideration: (1) the ba2
BCA and Adjusted BCA; (2) Moody' Basic Loss Given Failure approach,
which positions the Preliminary Rating Assessment of CRRs and CR Assessment
one notch above the bank's Adjusted BCA, prior to government support;
and (3) two notches of government support based on Moody's assumption
of very high level of government support.
WHAT COULD MOVE THE RATING UP/DOWN
The rating of MTN Programme and CRR are in line with SPDB's long-term
deposit rating. Any changes in SPDB's long-term deposit
rating will lead to a similar rating action on the MTN Programme and CRR.
There could be upward pressure on SPDB's deposit rating if the Chinese
government's capability or willingness to support the bank strengthens.
SPDB's BCA could experience upward pressure if (1) its asset quality,
as measured by the rate of formation of problem loans, improves;
(2) its profitability, as measured by the return on assets,
remains resilient; (3) its capital strengthens further, as
a result of capital raising and sound growth in risk-weighted assets
(RWA), with an improvement in its tangible common equity ratio;
and/or (4) its reliance on market funding decreases, with an improvement
in its market funds/tangible banking assets.
There could be downward pressure on SPDB's deposit rating if the Chinese
government's capability or willingness to support the bank weakens.
SPDB's BCA could experience downward pressure if (1) its asset quality
deteriorates; (2) its capital position weakens because of rapid asset
growth; and/or (3) its reliance on market funding increases.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks published in
August 2018. Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Shanghai Pudong Development Bank Co., Ltd. is headquartered
in Shanghai. It reported assets of RMB6.1 trillion at 30
June 2018.
The local market analyst for these ratings is Yulia Wan, +8621
2057 4017.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt 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 entities are participating and the rated entities or their agent(s)
generally provide 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.
Ray Heung
Senior Vice President
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
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
