ISTANBUL (BLOOMBERG) - Moody's Investors Service cut the rating of HSBC Holdings Plc's Turkish unit as chief executive Mr Stuart Gulliver seeks a buyer for the unprofitable business.
Moody's cut the long-term local and foreign currency deposit ratings of HSBC Bank AS to Ba1, the highest junk rating, from two levels and one level above junk respectively, it said in a statement late Wednesday. Both ratings have a negative outlook. As motivation for the moves, Moody's cited a potential reduction in support from the parent bank because of the sale process.
Mr Gulliver on June 9 unveiled a three-year plan to restructure the London-based bank, including reducing staff and selling operations in Brazil and Turkey. HSBC's Turkish unit, the country's 13th-largest bank by assets, was the most unprofitable local retail in the first quarter, posting a loss of 32 million liras (S$16.11 million), according to data from the Turkish banking association.
"Without the implicit support of HSBC, the risks around the subsidiary have risen," said Chris Wheeler, an analyst at Atlantic Equities LLP in London. "Of course, it could be sold to a strong competitor and the downgrade would be premature. However, Moody's is taking the view that as a seller, HSBC might be less willing to provide ongoing support if the auction is not successful."
A spokesman for HSBC Bank AS didn't immediately respond to e-mailed questions.