Moody's lowers HSBC-Turkey

Moody's Investors Service said it downgraded the long-term global local currency deposit rating of HSBC Bank AS-Turkey to Baa1 from A3 and affirmed the D+ standalone bank financial strength rating, but remapped it to Ba1 from Baa3 on the long-term scale.

At the same time, Moody's said it downgraded the bank's national scale rating to Aa2.tr from Aa1.tr. The rating agency also affirmed HSBC-Turkey's Ba3 long-term foreign currency deposit rating, Prime-2 and TR-1 short-term global local currency deposit ratings.

The outlook for the foreign currency deposit rating is positive. The outlook on the short-term ratings is stable, while the outlook on the other ratings has been changed to negative from stable.

Moody's said that the downgrade of the standalone global local currency deposit rating was triggered by a combination of (a) the deterioration in the bank's modest profitability, in risk-adjusted terms (b) efficiency indicators lagging sector average; and (c) Moody's expectation of a system-wide economic slowdown in Turkey that will exert further pressure on the bank's asset quality and profitability indicators.

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