Fitch cuts HSBC Bank Middle East to B/C

Fitch Ratings said it downgraded HSBC Bank Middle East's individual rating to B/C from B and kept the rating on Rating Watch negative.

The bank's AA- long-term issuer default rating, F1+ short-term issuer default rating and 1 support rating are affirmed with a negative outlook. The outlook reflects that on parent company HSBC Holdings plc's AA long-term issuer default rating.

The agency said the downgrade of the individual rating reflects the impact of the deteriorating operating environment, specifically in Dubai, on the bank's profitability and asset quality.

The individual rating remains on Rating Watch negative due to the continuing uncertainty in the Dubai economy following Dubai World's request on Nov. 25 to postpone debt repayments, Fitch said. HSBC Bank Middle East has exposure to Dubai World and to other Dubai government-related entities, and the agency said the extent to which this might translate into higher impairments is as yet unclear given the lack of transparency surrounding Dubai World's restructuring.

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