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Abu Dhabi, UAEWednesday 12 December 2018

HSBC Middle East downgraded by Moody's

Long-term deposit and debt ratings lowered on weakened capacity of parent to provide support

HSBC's head office in the Canary Wharf financial district in London. Reinhard Krause / Reuters
HSBC's head office in the Canary Wharf financial district in London. Reinhard Krause / Reuters

Moody's Investors Service downgraded HSBC Bank Middle East's long-term deposit and debt ratings on the weakening capacity of its parent, HSBC Holdings Plc, to provide it with support.

HSBC Bank Middle East Ltd's long term deposit rating was lowered to A3 from A2 and the short-term deposit ratings to Prime-2 from Prime –1. The bank's adjusted baseline credit assessment (BCA) was downgraded to a3 from a2 and its BCA was affirmed at baa2.

"The downgrade of HSBC Middle East Bank's deposit ratings and adjusted BCA reflects the weakening capacity of HSBC Holdings to provide support, as reflected by the assignment on September 27 of an a2 notional group Baseline Credit Assessment, one notch lower than the previous a1 intrinsic financial strength assessment," Moody's said.

"HSBC Holdings' lower BCA reflects deteriorating operating environments in key markets in which it operates including the United Kingdom and Hong Kong as well as other strategic markets such as China, Mexico, Canada and the Middle East."

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Moody's however upgraded the outlook of HSBC Bank Middle East's deposit rating to stable from negative, saying that despite the weakening capacity of HSBC Group to support it that it was still able to do so when needed.

"The stable outlook also reflects Moody's expectation that the financial fundamentals of HSBC Bank Middle East are likely to remain in line with current levels given the supportive operating environment in HSBC Bank Middle East," Moody's said.