Hong Kong, March 02, 2016 -- Moody's Investors Service has today changed to negative from stable
the rating outlook for the Hong Kong and Macau subsidiaries of Chinese
banks.
At the same time, Moody's has affirmed the baseline credit
assessments (BCA), adjusted BCAs, counterparty risk assessments
(CR assessments), and all ratings of these banks at their current
levels.
Nanyang Commercial Bank, Ltd.'s (deposits A1 review
for downgrade, BCA baa1 review for downgrade) ratings are currently
on review for downgrade, and its ratings are not impacted by today's
rating action.
Today's actions follow similar rating actions on these banks'
Mainland Chinese parents and the change in outlook to negative from stable
for the Chinese government (Aa3 negative). Please refer to press
release of rating action on China and these banks' Mainland parents
dated March 2, 2016.
Outlooks, which provide an opinion on likely rating direction over
the medium term, are assigned only to banks' long-term
deposit, issuer and senior unsecured debt ratings.
Moody's has changed the Macro Profile for Macau to "Moderate+"
from "Strong." The change of Macau's Macro Profile
has led Moody's to reassess Industrial & Commercial Bank of
China (Macau) Ltd's financial factors and standalone BCAs.
The bank's BCA is not immediately affected by this Macro Profile
change, although there exists some downward pressure on the bank's
standalone profile.
The list of affected ratings follows at the end of the press release.
RATINGS RATIONALE
The change in outlook to negative for the Hong Kong and Macau subsidiaries
of Chinese banks reflects the change to negative outlook on their parents'
ratings and the Chinese sovereign rating.
The change in the Chinese sovereign rating outlook to negative indicates
that the Chinese government's ability to support financial institutions
on a broad basis could be weaker than we had previously assessed.
A primary driver in the change in the Chinese government's outlook
is concern that the government's balance sheet is exposed to growing
contingent liabilities to support financial institutions as well as other
entities such as state-owned enterprises and regional local governments
in times of stress. The government's growing contingent liabilities
suggest that support from the Chinese government for financial institutions
and state-owned enterprises will be prioritized based on relative
importance of each entity.
The Hong Kong and Macau subsidiaries' long-term deposit and
senior unsecured debt ratings incorporate uplift from indirect Chinese
government support, which flows through their parents. Therefore,
their rating outlook is affected by the change in outlook for the Chinese
government (Aa3, negative).
In addition, growing economic and financial integration between
Mainland China and Hong Kong/Macau has led to increased Mainland exposures
for these banks.
Therefore, the rating actions also take into account the potential
adverse impact on asset quality for these banks, given the weakness
in macroeconomic conditions in China and likely spillovers into Hong Kong
and Macau.
MACRO PROFILE CHANGE
The change in Moody's assessment of Macau's Macro Profile
to "Moderate+" from "Strong" takes into account
the sharp slowdown in the territory's economic growth in 2014 and
2015 due to a decline in gross gaming revenues and the likely persistence
of such trend into 2016. Risks associated with the territory's
fast credit growth, declining property prices, its small economy
and high dependence on the gaming industry also weigh negatively on the
territory's Macro Profile.
In view of the negative outlook, Moody's does not expect any
upward rating pressures for the Hong Kong and Macau subsidiaries of Chinese
banks. Their outlook could be revised to stable if macroeconomic
conditions in China, Hong Kong, and Macau improve, and
these banks maintain sound financial metrics.
The affected banks' ratings could be downgraded if their parents'
ratings are downgraded. Their ratings could also be downgraded
if their fundamentals weaken, as evidenced by a more challenging
operating environment and/or deteriorating financial metrics.
LIST OF AFFECTED RATINGS
Issuer: Bank of China (Hong Kong) Limited
.... BCA affirmed at a2
.... Adjusted BCA affirmed at a2
.... CR Assessment affirmed at Aa2(cr)/P-1(cr)
.... Deposit rating affirmed at Aa3/P-1
.... Commercial paper affirmed at P-1
.... Senior unsecured debt affirmed at Aa3
.... Senior unsecured MTN program affirmed
at (P)Aa3
.... Subordinate debt affirmed at A3
.... Subordinated MTN program affirmed at
(P)A3
. Outlook for the bank is revised to negative from stable
Issuer: Chiyu Banking Corporation, Ltd.
.... BCA affirmed at a3
.... Adjusted BCA affirmed at a2
.... CR Assessment affirmed at Aa3(cr)/P-1(cr)
.... Deposit rating affirmed at A1/P-1
. Outlook for the bank is revised to negative from stable
Issuer: China Construction Bank (Asia) Corp. Ltd.
.... BCA affirmed at baa1
.... Adjusted BCA affirmed at baa1
.... CR Assessment affirmed at A1(cr)/P-1(cr)
.... Deposit rating affirmed at A2/P-1
.... Deposit note/CD program affirmed at (P)A2/(P)P-1
.... Senior unsecured debt affirmed at A2
.... Senior unsecured MTN program affirmed
at (P)A2
.... Basel III-compliant subordinate
debt affirmed at Baa2(hyb)
.... Other short term affirmed at (P)P-1
. Outlook for the bank is revised to negative from stable
Issuer: Industrial & Comm'l Bank of China (Asia) Ltd.
.... BCA affirmed at baa1
.... Adjusted BCA affirmed at baa1
.... CR assessment affirmed at A1(cr)/P-1(cr)
.... Deposit rating affirmed at A2/P-1
.... Commercial paper affirmed at P-1
.... Other short term affirm at (P)P-1
.... Senior unsecured debt affirmed at A2
.... Senior unsecured MTN program affirmed
at (P)A2
.... Subordinate debt affirmed at Baa2
.... Subordinate MTN program affirmed at (P)Baa2
. Outlook for the bank is revised to negative from stable
Issuer: Wing Lung Bank Limited
.... BCA affirmed at baa1
.... Adjusted BCA affirmed at baa1
.... CR Assessment affirmed at A2(cr)/P-1(cr)
.... Deposit rating affirmed at A3/P-2
.... Senior unsecured MTN program affirmed
at (P)A3
.... Subordinate debt affirmed at Baa2
.... Subordinate MTN program affirmed at (P)Baa2
. Outlook for the bank is revised to negative from stable
Issuer: China CITIC Bank International Limited
.... BCA affirmed at baa2
.... Adjusted BCA affirmed at baa2
.... CR Assessment affirmed at A3(cr)/P-2(cr)
.... Deposit rating affirmed at Baa1/P-2
.... Deposit note affirmed at Baa1
.... Deposit note/CD program affirmed at (P)Baa1/(P)P-2
.... Senior unsecured MTN program affirmed
at (P)Baa1
.... Subordinate debt affirmed at Baa3
.... Subordinate MTN program affirmed at (P)Baa3
.... Junior subordinate MTN program affirmed
at (P)Ba1
.... Non-cumulative preferred stock
affirmed at Ba2(hyb)
. Outlook for the bank is revised to negative from stable
Issuer: Industrial & Comm'l Bank of China (Macau) Ltd
.... BCA affirmed at baa3
.... Adjusted BCA affirmed at baa2
.... CR Assessment affirmed at A1(cr)/P-1(cr)
.... Deposit rating affirmed at A2/P-1
.... Deposit note/CD program affirmed at (P)A2/(P)P-1
. Outlook for the bank is revised to negative from stable
The principal methodology used in these ratings was Banks published in
January 2016. Please see the Ratings Methodologies page on www.moodys.com
for a copy of this methodology.
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.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
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
Vice President - Senior Analyst
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
SUBSCRIBERS: (852) 3551-3077
Sherry Zhang
Analyst
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
SUBSCRIBERS: (852) 3551-3077
Stephen Long
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (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
SUBSCRIBERS: (852) 3551-3077
Moody's changes to negative outlook of Hong Kong and Macau subsidiaries of Chinese banks; affirms ratings
