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Rating agencies warn HSBC about changes

fitchA ratings agency has warned HSBC that it could lose its AA-rating if it goes through with its plan to boost more profit.

Fitch, one of the top three ratings agencies which judges the safety of company debt, said the plan outlined by HSBC boss could potentially bring about the reduction of the bank’s current rating.

HSBC plans to cut as many as 25,000 jobs worldwide, with 8,000 of them in the UK. It will sell off its business in Turkey and in Brazil and reduce its investment bank.

It is also considering leaving the UK and relocating. That decision is to be taken by the end of this year.

"HSBC's plan to redeploy resources to Asia, shrink its investment bank, and cut costs is unlikely to have a positive rating effect while being potentially negative over the long-run," Fitch said on Wednesday.

It added that, in particular, how HSBC manages its growth in China and Asia could threaten its rating if this leads to higher risk.

Shares in the bank fell on Tuesday when the plan was announced.

Another ratings agency, Moody's, warned about moving, saying it could affect the bank's credit rating.

"In our view, a change in the group’s headquarters would be complex, costly and potentially disruptive to the group’s operations, drawing considerable management attention away from normal business at a time of declining profitability," Moody's said.

HSBC also announced that the HSBC name would be dropped in the UK and another, yet to be released, would be used. The HSBC brand has been used in Britain for more than 15 years having replaced the Midland Bank name.

The bank's credit rating currently stands at AA- stable, which is higher than Royal Bank of Scotland, Barclays, Lloyds and Standard Chartered.

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-5 #2 dw 2015-06-12 16:49
Why does anyone take the ratings agencies seriously when they give AAA ratings to toxic assets in return for fees from banks?
-6 #1 Gerald Davies 2015-06-12 11:32
Useful snap shot yesterday 11 June 2015 of what Moody's thinks of the Portuguese banking system as a whole and the Portuguese big banks - CGD, BPI, BCP, Montepio etc in particular.

Also introducing us to counterparty risk assessment ratings of these banks - where a failed bank, as with (BES) Banco Espirio Santo, has obligations to pay Goldman Sachs amongst many others. And the probability of default.


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