Moody's upgrades rating of HSBC's UAE branches to Aa2

This follows the recent upgrade of the government's foreign and local currency bond ratings and the country ceiling for foreign currency bank deposits of the UAE to Aa2 from Aa3. The ratings of all the other UAE banks rated by Moody's remain unchanged.

Moody's notes that except for the UAE branches of HSBC Bank Middle East Limited, the foreign currency deposit ratings of the UAE banks were not constrained by the country ceiling and thus are unaffected by the recent upgrade of the ceiling. The banks' local currency deposit ratings, ranging from Baa1 to Aa3, continue to derive from the unchanged Aa2 Local Currency Deposit Ceiling (LCDC) assigned to the UAE.

According to Moody's rating methodology, the deposit ratings are based on the individual bank's Baseline Credit Assessment, the country LCDC and Moody's assessment of possible support (i.e. parental or systemic being provided to the bank in case of need). With regard to the banks based in the UAE, Moody's considers the ratings of the Federal Government of the UAE as the benchmark for all rated financial institutions headquartered in the UAE. However, Moody's also recognises the willingness and capacity of each emirate to provide support individually. "This is incorporated in the level of support imputed for each bank" says Peter Carvalho VP-Senior Analyst at Moody's.