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Moody's downgrades ratings of Standard Chartered Bank (Singapore)

Moody's downgraded Standard Chartered Bank (Singapore) Ltd.'s long-term local and foreign currency issuer and deposit ratings to A1 from Aa3.

The rating agency said March 14 that it also downgraded the bank's baseline credit assessment and adjusted baseline credit assessment to "a3" from "a2," its long-term counterparty risk assessment to Aa3(cr) from Aa2(cr), and its long-term counterparty risk rating to Aa3 from Aa2.

The outlook on the bank was revised to stable from review for downgrade.

The bank's short-term local and foreign currency issuer and deposit ratings were confirmed at P-1, its short-term counterparty risk assessment was confirmed at P-1(cr) and its short-term counterparty risk rating was confirmed at P-1.

The rating action concludes the review for downgrade of the bank's ratings and assessment initiated in February 2018. The review was concluded as the bank is close to finalizing the merger with the Singapore branch of Standard Chartered Bank.

The rating agency noted that ratings of Standard Chartered Bank (Singapore) are now at the same level as those of Standard Chartered Bank.

The long-term ratings and assessments were downgraded by one notch because the inclusion of the branch's operations into Standard Chartered Bank (Singapore) will moderately weaken the Singapore unit's credit profile, Moody's said. It added that the merger will lead to higher asset risk for Standard Chartered Bank (Singapore) because of the inclusion of corporate loans, compared to its previously lower-risk retail focused operations.

Moody's lowered the weighted Macro Profile for Standard Chartered Bank (Singapore) to Strong+ from Very Strong- to take into account the fact that some of the branch's corporate clients are active internationally and/or regionally and have higher risks on average than entities operating solely or mostly in Singapore.

An upgrade of Standard Chartered Bank (Singapore)'s deposit and issuer ratings could result from an improvement in its solvency and liquidity metrics, while its ratings could be downgraded if it pursues overly aggressive loan growth, thereby increasing its risk profile, or if the bank's financial ratios deteriorate significantly.

Standard Chartered Bank (Singapore) and Standard Chartered Bank are units of Standard Chartered PLC.