Moody's Investors Service has downgraded Tuesday the bank's financial strength rating (BFSR) of HSBC Bank Middle East Limited (HBME) to C from C+ and its long-term local currency debt rating and foreign currency deposit and debt ratings to Aa3 from Aa2. The rating outlook is now stable. The rating action concludes the rating review initiated on March 17, 2009. HBME is a wholly-owned subsidiary of HSBC Holdings plc, registered in the Channel Islands, with operations in the Middle East. The new BFSR of C maps to a Baseline Credit Assessment of A3. The three-notch uplift from this Baseline Credit Assessment to the Aa3 long-term debt and deposit ratings reflects Moody's continued assessment of a very high probability of support for HMBE from its parent in case of need. The downgrade reflects Moody's expectation that HBME will encounter pressure on its asset quality and profitability in the countries in which it operates.
