Fitch Ratings has revised HSBC Bank Middle East Limited's (HBME) outlook to negative from stable, following a similar rating action on its parent, HSBC Holding.

The ratings agency affirmed the bank’s long‐term issuer default rating (IDR) at 'A+'.

The negative outlook on HSBC reflects Fitch’s view that the economic and financial market fallout from the coronavirus outbreak creates material downside risks to the bank’s business-model strength, and to its ability to execute on its strategy and planned restructuring in line with its targets.

Fitch sees an increased risk to deterioration of HSBC's asset quality, earnings and capitalisation as a result of the disruption, albeit from currently strong levels.

HBME's ratings reflect Fitch’s view of an extremely high probability that the parent would support its subsidiary if needed.

“Fitch's view is based on HBME being a key and integral, wholly-owned subsidiary of HSBC, and its importance for the parent's Middle East and North African operations.” The ratings agency said.

“A high level of integration and common branding also provide the parent a strong motivation to support the subsidiary in case of need, in Fitch's view,” it added.

(Writing by Gerard Aoun; Editing by Seban Scaria)

(gerard.aoun@refinitiv.com) 

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