Moody’s reviews Bermuda Commercial Bank

Moody’s Investors Service said it placed on review for downgrade the ratings of Bermuda Commercial Bank Ltd., including the bank’s long-term deposit and long-term issuer ratings of Ba2, standalone baseline credit assessment of Ba2 and counterparty risk assessment of Ba1(cr).

The bank’s short term ratings and counterparty risk assessment of not-prime and not-prime(cr) are unaffected by this action.

The review for downgrade reflects the concern that the bank is taking on increased asset risk through its Sept. 18th acquisition of Private and Commercial Finance Group plc from its parent holding company, Somers Ltd., a financial services investment holding company.

This transaction reflects a major repositioning of the bank’s business and risk profile and shift in strategy, Moody’s said.

Going forward, auto loans will make up the majority of the bank’s loans, the agency said.

Moody’s said it will review the effects of the acquisition on the bank’s risk profile, focusing on the quality of the acquired loans, growth strategy and the bank’s capacity to manage a portfolio of high-yielding loans originated in the United Kingdom.

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