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Scope assigns new AA Issuer Ratings to HSBC UK Bank and HSBC Bank after ring-fencing related changes

Scope also affirmed all other existing ratings on various HSBC group entities. All ratings have a Stable Outlook.

Scope Ratings pointed out that well ahead of the January 2019 deadline, HSBC Holdings PLC has made the necessary changes to its organisational and legal structure to implement UK ring-fencing requirements.

Qualifying UK retail banking and wealth management, commercial banking and private banking activities have been transferred to HSBC UK Bank PLC, a newly created ring-fenced bank. Meanwhile, HSBC Bank PLC now comprises UK global banking and markets businesses as well as overseas subsidiaries and branches and becomes the group’s non-ring-fenced bank.

As detailed in its February 2018 report looking at the implications of UK ring-fencing requirements, Scope considers ring-fencing to be mainly for the benefit of retail customers rather than institutional investors. Further, Scope’s analysis focuses on an operating company’s business model, financial metrics and importance to its group rather than on its ring-fencing status.

Scope affirmed the existing ratings on various HSBC group entities. In addition, Scope assigned first time Issuer Ratings of AA to HSBC UK Bank PLC and HSBC Bank PLC. The rating agency expects both entities to be important operating companies of the HSBC group, benefitting from strong group management. In addition, the agency noted that both operating companies will continue to be supervised by UK regulatory authorities.

The following rating actions have been taken regarding the various entities of the HSBC group:

HSBC Holdings PLC

  • Affirmed Issuer Rating of AA.
  • Affirmed AA- rating on senior unsecured debt (TLAC/MREL eligible).
  • Affirmed A rating on Tier 2 securities.
  • Affirmed BBB rating on AT1 securities.
  • Affirmed S-1+ rating on short-term debt.

HSBC Bank PLC

  • Assigned new Issuer Rating of AA.
  • Affirmed AA rating on senior unsecured debt (not TLAC/MREL eligible).

HSBC UK Bank PLC

  • Assigned new Issuer Rating of AA.

All ratings have a Stable Outlook.