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Moody's revises outlook on HSBC, units amid restructuring plans

Moody's on Dec. 18 changed the outlook on HSBC Holdings PLC and units HSBC Bank PLC, HSBC France SA, HSBC USA Inc. and HSBC Bank USA NA to negative from stable amid the group's restructuring plans.

The rating agency said the new outlook reflects its expectation of additional risks and costs arising from the group's planned repositioning of its operations in Europe, particularly in France, and its businesses in the U.S. French banking unions said in September that the lender is planning to conduct a strategic review of its French retail operations. Interim CEO Noel Quinn is also making the restructuring of the bank's low-return investment banking business a key part of his strategic overhaul of the group, to be unveiled in February 2020.

Moody's, meanwhile, affirmed HSBC Holdings' A2 long-term senior unsecured debt ratings and "a2" baseline and adjusted baseline credit assessments, and revised the outlook on the senior unsecured debt ratings to negative from stable. The outlook change also reflects pressures on the group's asset quality and profitability in Asia amid a more difficult operating environment in Hong Kong and the rest of the region, Moody's Senior Vice President Alessandro Roccati said.

Also affirmed were HSBC Bank's Aa3 long-term issuer, senior unsecured debt and deposit ratings, "baa2" baseline credit assessment, "a3" adjusted baseline credit assessment, Aa2/Prime-1 long- and short-term counterparty risk ratings, Aa2(cr)/Prime-1(cr) long- and short-term counterparty risk assessments, P-1 short-term deposit ratings and (P)P-1 other short-term rating.

The agency also affirmed HSBC France's Aa3 long-term deposit and senior unsecured debt ratings with the outlook changed to negative from stable, in line with that of its parent. Moody's expects HSBC Holdings' capacity to provide support to the unit when needed to decline. Also affirmed were the unit's Aa2/P-1 long- and short-term counterparty risk ratings, Aa2(cr)/P-1(cr) long- and short-term counterparty risk assessments, "baa3" baseline credit assessment, "a2" adjusted baseline credit assessment, (P)P-1 other short-term rating, and P-1 short-term deposit rating.

HSBC USA's senior unsecured debt rating was affirmed at A2, with the outlook changed to negative from stable. Moody's also affirmed HSBC Bank USA's Aa2 long-term deposit rating and Aa3 long-term issuer rating and senior unsecured debt rating, and changed the outlooks on these ratings to negative from stable.

HSBC Bank USA's P-1 short-term deposit rating, Aa3/P-1 long- and short-term counterparty risk ratings, Aa3(cr)/P-1(cr) long- and short-term counterparty risk assessments, "baa2" baseline credit assessment and "a2" adjusted baseline credit assessment were also affirmed.