Moody's affirms HSBC

Moody's Investors Service said it affirmed the ratings of the Hongkong and Shanghai Banking Corp. Ltd. (B+/Aa1) following the announcement that it signed an agreement with Lone Star to buy its controlling 51.02% stake in Korea Exchange Bank (C-/A2).

The outlook is stable.

"Moody's affirmation of HSBC AP's ratings reflects our expectation that should the transaction be completed as proposed, the bank's capital adequacy ratio is likely to be maintained near the current level of about 11%," Leo Wah, Moody's vice president and senior analyst, said in a written statement.

"The proposed transaction would reduce HSBC AP's profitability and loan quality, but not materially, as it is a much larger bank than KEB," Wah said. "Moreover, KEB would further diversify HSBC AP's earnings, while its strong foreign exchange franchise would add to non-interest income."

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