Moody's may lift Korea Exchange Bank

Moody's Investors Service said it placed Korea Exchange Bank's ratings on review for possible upgrade, including its A2 foreign-currency senior debt rating and A3 subordinated debt and A2 global local-currency deposit rating. The C- bank financial strength rating, along with all other ratings, is unaffected at this stage given the preliminary nature of the transaction and the absence of any details.

The outlook is stable.

The action follows news from The Hongkong and Shanghai Banking Corp. Ltd., rated B+/Aa1, that it has signed an agreement with Lone Star to buy its controlling 51.02% stake in Korea Exchange Bank.

The review will consider the parental support that the bank could enjoy under a financially stronger and a higher-rated strategic shareholder, Fitch said.

However, Moody's said it recognizes several obstacles to the completion of this transaction. The deal is contingent on the receipt of regulatory approvals, the agency said, and is complicated by pending legal action in Korea.

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