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Moody's: Korea Exchange Bank Credit may be upgraded
Moody's Investors Service revised Korea Exchange Bank's rating outlook for its E+ bank financial strength rating to stable from positive and affirmed the bank's Baa2/Baa3 senior and subordinated debt and Baa2/Prime-3, long-term and short-term deposit ratings - all of which carry a stable outlook.
At the same time, the agency placed Korea Exchange Bank Credit Service's B1/B3 senior and subordinated debt ratings on review for possible upgrade.
Moody's said the rating actions were due to Korea Exchange Bank's pending acquisition of and subsequent merger with financially troubled credit card subsidiary, Korea Exchange Bank Credit Service.
In the case of Korea Exchange Bank Credit Service, Moody's said its review will consider the much improved credit profile of the company from being part of Korea Exchange Bank. Moody's said it sees the explicit backing from Korea Exchange Bank and the merger announcement as critical to Credit Service's ability to fund maturing obligations prior to the merger.
In the transaction, Korea Exchange Bank will acquire the remaining 31.4% stake of Credit Service through a share swap. The transaction is expected to close on Feb. 28.
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