TEXT-S&P Standard Chartered Bank Korea upgraded to 'A+'
Sept 14 - Standard & Poor's Ratings Services said today that it had raised its long-term issuer credit rating on Standard Chartered Bank Korea Ltd. (SCBK) to 'A+' from 'A'. At the same time, we raised the issue rating on the bank's US$300 million 7.267% hybrid Tier I securities due March 3, 2034, to 'A-' from 'BBB+', which is two notches below the bank's long-term issuer credit rating. We also affirmed our 'A-1' short-term counterparty credit rating on the bank. The outlook on the long-term issuer credit rating is stable.
The upgrade follows our action earlier today on the sovereign credit ratings on Korea (local currency AA-/Stable/A-1+; foreign currency A+/Stable/A-1) (see "Republic of Korea Long-Term Ratings Raised To 'A+/AA-' On Assessment Of Reduced Geopolitical Risks; Outlook Stable" published today).
The 'A+' long-term issuer credit rating on SCBK is three notches higher than its 'bbb+' stand-alone credit profile (SACP), reflecting strong group support by virtue of its "core" status within the Standard Chartered group and the constraint on its issuer credit rating from the 'A+' foreign-currency sovereign rating on Korea. SCBK is a "core" subsidiary of the Standard Chartered group, which is led by U.K.-based Standard Chartered PLC (SCPLC; A+/Stable/A-1). SCBK accounted for about 10% of the group's capital as of December 2011. Standard & Poor's expects the Korean subsidiary to play a key role in SCPLC's global expansion strategy.
The stable outlook reflects the stable outlook on the foreign-currency rating on Korea, which constrains the ratings on SCBK. The ratings on SCBK are strongly correlated with its relatively important role within the Standard Chartered group. We believe SCBK will likely maintain its significant importance within the group in the next two years.
There is limited potential for upward movement of the ratings because they are effectively constrained by the foreign-currency sovereign ratings on Korea. Any event that significantly threatens SCBK's relative importance within the group could put downward pressure on the ratings. However, we believe this scenario is unlikely.
RELATED CRITERIA AND RESEARCH
Banks: Rating Methodology And Assumptions, Nov. 9, 2011
Group Rating Methodology And Assumptions, Nov. 9, 2011
Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9,
Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011
BICRA On Korea Revised To Group '3' From Group '4', Nov. 9, 2011
Republic of Korea Long-Term Ratings Raised To 'A+/AA-' On Assessment Of
Reduced Geopolitical Risks; Outlook Stable, Sept. 14, 2012
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