Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
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 information 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
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.
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
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.
09 Mar 2009
HSBC Bank plc downgraded to Aa2/C+, negative outlook
London, 09 March 2009 -- Moody's Investors Service today changed the outlook on the Aa2 long-term
senior debt ratings of HSBC Holdings plc (HSBC Holdings) to negative from
stable. Moody's also downgraded the bank financial strength
rating (BFSR) of HSBC Bank plc (HSBC Bank), the group's European
operations, to C+ from B and its debt and deposit ratings to
Aa2 from Aa1; the outlook on these ratings is now also negative.
The Prime-1 ratings on the short-term obligations on both
entities were affirmed. Separate press releases will follow on
other rated subsidiaries.
NEGATIVE OUTLOOK ON HSBC HOLDINGS
The change in outlook to negative on HSBC Holdings' Aa2 long-term
debt rating reflects Moody's view of the increasing pressures on
the profitability and capital of the group as the credit crunch develops
into a global phenomenon, as well as ongoing charges in relation
to the US consumer finance business, HSBC Finance, and remaining
ABS exposures on the group's balance sheet. The rating also
takes into account the benefit of the group's recently announced
US$17.7bn rights issue.
The rating agency still considers HSBC Holdings to be one of the more
resilient global banks, with the capacity to continue to generate
capital over the medium term through earnings. Liquidity remains
a core strength of HSBC, with a high level of customer deposits
(the loan-to-deposit ratio was 84% at the end of
2008). Elisabeth Rudman, Senior Credit Officer and lead analyst
for HSBC, explained that "we expect the group to be able to
continue to generate capital and maintain its current rating level,
even in a scenario based on Moody's stress tests with a drop in
pre-provision earnings of up to 30% and provisions and writedowns
(net of specific provisions already set aside for HSBC Finance) of up
to USD40 billion".
With regards to the ongoing pressure from the group's US exposures,
Moody's recognises that the group was able to absorb large write-offs
(US$16.3 billion) and provide substantial capital injections
(almost US$4.5 billion) to HSBC Finance over the past two
years. During that time, the US-based finance company
generated core pre-provision profit of around US$16 billion.
However, although the group has now established US$12.4
billion provisions for future charge-offs, it is clear that
the closure of the branch network and future delinquencies will continue
to absorb capital for another two to three years (which the group has
factored into its capital budgeting process). The negative outlook
on the group's rating partly also reflects the uncertainties remaining
over the impairment prospects of HSBC Finance.
The group's 2008 pre-tax profits of US$9.3
billion (US$19.9 billion before a write-off of US$10.6
billion in goodwill in relation to the HSBC Finance acquisition) were
supported by a number of one-off gains (including US$6.6
billion own debt gain, US$2.4 billion gain in relation
to sale of French branches,) but were also affected by a number
of large one-off negative items (including the US$10.6
billion write-off of goodwill, US$1 billion loss in
relation to Madoff exposures and US$5.4 billion credit writedowns).
Despite a slowdown from high growth rates in Asia, we expect the
group to continue to generate substantial pre-tax profits in Asia
(US$11.9 billion from Hong Kong and the rest of Asia Pacific
in 2008), as well as in Latin America (US$2.0 billion),
alongside a weaker outlook for Europe (US$10.9 billion),
and poor underlying profitability in the US (loss of US$15.5
billion). However, as the global recession gathers speed,
the benefits from the group's wide geographical diversification
will lessen, and increasing impairment charges across the group
could put additional pressure on capital.
In addition, although HSBC has never been one of the largest global
investment banking players, its capital market activities and the
conduits it established have left the bank with a legacy of a large gross
notional position of approximately US$80 billion ABS (which excludes
the US government agency ABS), held both in the trading book and
as available-for-sale assets. Moody's noted
that US$3.5 billion that would also have affected the P&L
in 2008 without the reclassification of US$16.6 billion
assets under IAS39. The group has taken US$18.7 billion
negative fair value adjustments against the available-for-sale
securities. The bank intends to hold these securities to maturity,
and expects a substantially lower realised loss than the unrealised fair
value adjustments. However, Moody's cautions that a
higher level of impairments than assumed by the group in its own stress
tests or a sale that crystallised losses would lead to a large jump in
writedowns for the group.
Moody's noted that some of the downward pressure on HSBC Holding's
Aa2 rating has been mitigated by the group's fully underwritten
US$17.7 billion rights issue and the reduction in dividend
payments. The group estimates that the US$17.7 billion
capital-raising, announced at the time of the 2008 results,
will strengthen pro-forma core equity and Tier 1 ratios to 8.5%
and 9.8%, respectively. "However,
if this additional capital is allocated to substantial acquisitions rather
than being largely employed to cover the existing risks in the portfolio,
then this could increase the downward pressure on the Aa2 rating",
added Elisabeth Rudman.
The ratings of HSBC Holdings are based upon both the intrinsic financial
strength of each of its various subsidiaries and the broad geographic
diversification among these subsidiaries. They also incorporate
a very high probability of systemic support from the UK government,
which translates into 2 notches of support for the Aa2 ratings.
The holding company's ratings also reflect the structural subordination
of holding company creditors.
DOWNGRADE OF HSBC BANK RATINGS
The downgrade of HSBC Bank's ratings to Aa2/C+ with a negative
outlook, from Aa1/B, reflects the bank's modest capital
ratios, risks from large corporate and ABS exposures, and
pressures on profits across HSBC's European banking franchise.
But the ratings also incorporate a high level of systemic support and
support from the group for this core part of its operations.
With regard to the UK activities, which represent the majority of
the consolidated bank's lending, Moody's considers the
residential mortgage books and personal lending to be conservatively positioned
relative to its peers, but expects higher provisions on the corporate
loan books and further potential writedowns from Global Banking and Markets
to reduce profitability through the recession.
A large proportion of the ABS positions, which were discussed above
for HSBC Holdings, are situated on the balance sheet of HSBC Bank.
Since the capital strength of HSBC Bank is weaker than that of HSBC Holdings,
Moody's regards them as representing a relatively higher risk for
the standalone financial strength of HSBC Bank.
Other pressures for the consolidated entity HSBC Bank include weak profitability
in Global Banking and Markets in the French operations and a weaker outlook
for private banking revenues.
The capital ratios of HSBC Bank plc are relatively modest (6.8%
Tier 1 ratio at the end of December, 2008), despite capital
injections by the parent of GBP1.75 billion in 2008; and a
further GBP527 million capital injection that was made on 30 January 2009.
Given potential further writedowns and larger provisions in 2009,
Moody's considers that these capital levels did not support a BFSR
in the B range, but were more adequate for a BFSR in the C range.
As Moody's took into consideration a certain flexibility in reallocating
capital within the group -- and the group's consolidated stronger
capitalisation levels, especially when taking into consideration
the rights offering - the impact of such further writedowns and
provisions is at least partially mitigated, underpinning the BFSR
at the C+ level.
The C+ BFSR maps to a Baseline Credit Assessment of A2. The
Aa2 debt ratings incorporate both a very high probability of UK systemic
support, given the importance of the bank in the UK banking system,
as well a very high probability of support from the overall HSBC group.
The negative outlook on the debt ratings is in line with the negative
outlook for HSBC Holdings. The ratings of the bank's subordinated
debt and hybrid instruments were downgraded in line with the downgrade
of the senior debt ratings and maintain our usual notching practices.
A separate press release will be issued on rating actions related to the
group's other rated subsidiaries.
Moody's last rating action on HSBC Holdings plc was implemented
on 29 November 2007, when its outlook was revised from positive
to stable. The last rating action on HSBC Bank plc was on 20 April
2007 when the debt and deposit ratings were upgraded from Aa2 to Aa1,
following the implementation of JDA methodology.
The principal methodologies used in rating these issuers were "Bank
Financial Strength Ratings: Global Methodology" (February
2007) and "Incorporation of Joint-Default Analysis into Moody's
Bank Ratings: A Refined Methodology" (March 2007), which
can be found at www.moodys.com in the Credit Policy &
Methodologies directory, in the Ratings Methodologies sub-directory.
Other methodologies and factors that may have been considered in the process
of rating these issuers can also be found in the Credit Policy & Methodologies
At the end of 2008, HSBC Holdings plc had total assets of US$2,527
billion and is headquartered in London. HSBC Bank plc had total
assets of GBP924 billion at the end of 2008 and is also headquartered
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
Moody's changes outlook on HSBC Holdings to negative.
Financial Institutions Group
Moody's Investors Service Ltd.
JOURNALISTS: 44 20 7772 5456
SUBSCRIBERS: 44 20 7772 5454
No Related Data.
© 2020 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/OR ITS CREDIT RATINGS AFFILIATES ARE MOODY'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY'S (COLLECTIVELY, "PUBLICATIONS") MAY INCLUDE SUCH CURRENT OPINIONS. MOODY'S INVESTORS SERVICE 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 INVESTORS SERVICE CREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS ("ASSESSMENTS"), AND OTHER 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. AND/OR ITS AFFILIATES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY'S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY'S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS 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,
ASSESSMENTS, OTHER OPINIONS, AND 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, ASSESSMENTS, OTHER OPINIONS OR 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.
MOODY'S CREDIT RATINGS,
ASSESSMENTS, OTHER OPINIONS AND 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 its 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, ASSESSMENT, 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 credit rating, agreed to pay to Moody's Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody's investors Service also maintain policies and procedures to address the independence of Moody's Investors Service credit ratings and credit rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody's Investors Service 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 credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit 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.