Moody’s lowers Standard Chartered

Moody’s Investors Service said it placed on review for downgrade the long-term ratings of Standard Chartered plc and Standard Chartered Bank.

The review follows news of the bank’s third-quarter 2015 results and a new strategic plan, Moody’s said.

The ratings on downgrade review include Standard Chartered Bank’s Aa2 long-term deposit rating, Aa2 senior unsecured debt rating, Aa2 long-term deposit note program rating, provisional Aa2 senior unsecured medium-term note program rating, Aa2(cr) long-term counterparty risk assessment, A2 standalone baseline credit assessment and adjusted baseline assessment, A2 subordinated debt rating, provisional A2 subordinated medium-term note program rating, Baa1(hyb) junior subordinated debt rating and Baa1(hyb) preference share rating.

Also on downgrade review include Standard Chartered’s Aa3 senior unsecured debt rating, provisional Aa3 senior unsecured medium-term note program rating, A2 subordinated debt rating, provisional A2 subordinated medium-term note program rating, Baa1(hyb) junior subordinated debt rating and Baa2(hyb) non-cumulative preference share rating.

The group’s earnings and asset quality have been under pressure for several years, stemming from the combined effect of the low interest-rate environment, competition from excess liquidity in many of its key operating markets, increasing regulatory costs and weakening credit cycle, Moody’s said.

The group’s latest strategy plan assumes only a modest recovery of profitability to a return on average equity of about 8% by 2018, suggesting the group is facing structural profitability weaknesses, the agency said.

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