(Alliance News) - Moody's Investors Service has cut the outlook for HSBC Holdings PLC's Chinese operations, the day after doing the same in Hong Kong.
The outlook for HSBC Bank China Co Ltd has been reduced to negative from stable, though the A1 rating has been reaffirmed.
On Tuesday, Moody's affirmed the Aa2/P-1 deposit rating for HSBC Hong Kong and Hang Seng Bank. HSBC Hong Kong is the parent of HSBC Bank China.
"HSBC China's long-term issuer and deposit ratings incorporate multiple notches of uplift based on Moody's assessment of a very high level of affiliate support from the parent in times of need, and are aligned with the parent's baseline credit assessment," said Moody's.
Moody's said the Chinese subsidiary's ratings are unlikely to be upgraded, given the negative outlook. A downgrade could come if the parent company's BCA is downgraded.
That would happen if asset quality, profits, or the capital position weakened, Moody's added.
"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," Moody's concluded.
HSBC shares were 0.6% higher in London on Wednesday morning at a price of 596.85 pence each.
By George Collard; georgecollard@alliancenews.com
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