27th Feb 2019 18:20
LONDON (Alliance News) - Moody's Investors Service on Wednesday affirmed all the ratings of Standard Chartered PLC and Standard Chartered Bank after a recent restructuring announcement.
Simultaneously, Moody's has downgraded Standard Chartered Bank's baseline credit assessment to baa2 from baa1, though it affirmed the bank's adjusted BCA at baa1.
Futhermore, Moody's also assigned a notional baa1 rating to Standard Chartered. Moody's said the outlook on all of these ratings is stable.
The rationale behind these ratings is a recent announcement by the group that it is planning to restructure its operations. This will result in Standard Chartered Bank Hong Kong Ltd being held directly by Standard Chartered rather than being jointly owned by Standard Chartered and Standard Chartered Bank.
The group's subsidiaries in Korea, China and Taiwan will be restructured under Standard Chartered Bank Hong Kong, rather than being held by Standard Chartered Bank.
Moody's justified the ratings affirmations saying: "The planned restructuring changes the legal structure of the group and does not cause any material changes in the underlying group operations, including how the group is managed."
The downgrading of Standard Chartered Bank was attributed to the fact that it will no longer hold joint ownership of Standard Chartered Bank Hong Kong.
"[Standard Chartered Bank Hong Kong's] credit profile is stronger than that of the overall group. The change in ownership structure therefore results in [Standard Chartered Bank's] standalone credit profile — and in turn its BCA — becoming weaker," Moody's said.
"On a pro forma basis, Moody's estimates that the change in ownership will weaken SCB's credit metrics. In particular, four of the five financial profile factors — asset quality, capital, profitability and funding will be weaker," Moody's added.
The adjusted BCA was maintained on the grounds the Standard Chartered Bank "benefits from one
notch of affiliate support from the group".
Shares in Standard Chartered closed down 2.1% at 602.20 pence on Wednesday.
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