Moody's cuts Zurich Bank

Moody's Investors Service said it downgraded the standalone bank financial strength rating of Zurich Bank to E+, from D-, mapping to B3 on the long-term scale.

Moody's affirmed the Aa3/Prime-1 long- and short-term bank deposit ratings and the backed provisional A1 senior unsecured debt program rating.

The outlook is stable.

Moody's said the downgrade reflects the continuing deterioration in the loan book of Zurich Bank. The bank stopped lending in Ireland and the UK in 2009 and 2010, respectively, and its loan book is effectively in run-down.

Given the challenging environment in both of its markets, Moody's said it believes that the bank's loan quality, earnings and capitalisation could weaken further, potentially requiring additional support from Zurich Insurance Group Ltd., its ultimate parent.

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