S&P revises Chinese banks, nonbank financials to negative

Standard & Poor's said it took various rating actions on some banks and nonbank financial institutions in China and their related subsidiaries in China and Hong Kong after its revision of the rating outlook on China to negative from stable on March 31.

The agency revised the outlook on the long-term issuer credit ratings on the following banks and nonbank financials to negative from stable and affirmed the issuer credit ratings and Greater China regional scale ratings: Agricultural Bank of China Ltd., Agricultural Development Bank of China, China Development Bank Corp., CDB Leasing Co. Ltd., Export-Import Bank of China, DBS Bank (China) Ltd., Hang Seng Bank (China) Ltd., China International Capital Corp. Ltd., and China International Capital Corp. (Hong Kong) Ltd.

S&P also revised the outlooks to negative, affirmed the issuer credit ratings, and lowered the Greater China regional scale ratings on Bank of Communications Co. Ltd. and Bank of Communications Financial Leasing Co. Ltd. to cnAA-/cnA-1 from cnAA/cnA-1.

S&P said it took the various rating actions because it believes the negative outlook on China could: (a) Reduce the room for a rating uplift that the agency factored into its ratings on these Chinese banks and nonbank financials for extraordinary government support; or (b) constrain the credit profiles of DBS Bank (China) Ltd. and Hang Seng Bank (China) Limited, the two foreign banks operating in China.

Other things being equal, the agency expects such pressure or constraints to lead to similar rating action if it downgrades China.

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