Fitch downgrades HSBC Bank Middle East's viability rating

Fitch Ratings said it downgraded HSBC Bank Middle East's viability rating to bbb from bbb+ and affirmed its long-term issuer default rating at AA- with a negative outlook, short-term issuer default rating at F1+, support rating at 1 and the senior notes issued under its euro medium-term note program at AA-/F1+. The senior trust certificates issued under HBME Sukuk Co. Ltd.'s trust certificate issuance program were affirmed at AA-.

The downgrade follows updated disclosure on the asset quality of the bank, which Fitch said resulted in a substantial rise in renegotiated loans as well as faster than previously anticipated new non-performing loan formation. The agency said the downgrade also reflects the bank's high borrower concentration.

The rating continues to be underpinned by the bank's solid regional franchise, diversified and good earning capabilities, strong liquidity position and the benefits of being part of the HSBC group, Fitch said.

The agency said the negative outlook on HSBC Bank Middle East's long-term issuer default rating reflects the negative outlook on HSBC Holdings plc's long-term issuer default rating.

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