Fitch affirms HSBC at ‘AAA(lka)’; Outlook stable

Fitch Ratings Lanka has affirmed HSBC Sri Lanka Branch’s (HSBCSL) National Long-Term Rating at ‘AAA (lka)’.The Outlook is Stable. The rating reflects the financial strength of parent The Hong Kong and Shanghai Banking Corporation Limited (HKSB; ‘AA-’/Stable), given that HSBCSL is a branch of HKSB and part of the same legal entity as HKSB. Thus, Fitch believes that support from HKSB would be forthcoming if required, subject to any regulatory constraints on remitting money into Sri Lanka.

HKSB is rated above Sri Lanka’s Issuer Default Rating (IDR) of ‘BB-’ which has a Stable Outlook.

HSBCSL’s National Long-Term Rating is at the highest end of the National Rating scale. A downgrade of HSBCSL’s rating could result from HKSB’s rating being downgraded below Sri Lanka’s IDR.

Any changes to Fitch’s expectation of support from HKSB could also be negative for the rating.

The affirmation of HSBCSL’s rating follows the downgrade of HKSB’s IDR to ‘AA-/Stable’ from ‘AA/Negative’ on 7 December 2012 (please see the rating action commentary on www.fitchratings.com).

Established in 1892, HSBCSL is Sri Lanka’s largest foreign bank branch.

HSBC Bank International Limited is the offshore banking arm of the HSBC Group and is wholly owned by HSBC Bank plc, focusing on providing offshore solutions and cross border services to expatriates and migrants.

It provides a full range of multi-currency personal banking services to a range of customer segments, including a full internet banking and telephone banking service.