S&P AFFIRMS RATINGS ON HK BANKS, OUTLOOKS TO NEGATIVE

TOKYO, March 22 /PRNewswire/ -- Standard & Poor's today affirmed its
ratings on the following Hong Kong financial institutions: Dao Heng Bank Ltd.,
International Bank of Asia, GE Capital Finance Ltd., and Hong Kong & Shanghai
Banking Corp. The outlooks on the long-term ratings of the first three banks
were revised to "negative" from "stable". Hong Kong & Shanghai Banking's
short-term rating, for which an outlook is not applicable, is not affected
(please see ratings list below). 
The outlook revisions reflect a more difficult operating environment
resulting from a slowdown in Hong Kong's economy and heightened systemic risks
in the local market. The general market trend is likely to adversely affect
the financial performances of all banks within the system, though to varying
degrees. Increased volatility in the local property and stock markets, rising
unemployment, higher debt-servicing costs, and a subdued retail sector have
negative implications for the banking system's asset quality and profitability
over the near term. Rapid loan growth and sharp rises in asset prices have
further increased the banks' vulnerability to an economic slowdown. In
addition, the pricing structure of local banks exposes them to changes in the
spread between the prime rate and HIBOR. This was particularly evident in the
fourth quarter of 1997, when the banks experienced negative spreads. Standard
& Poor's expects most banks will report satisfactory profit growth for 1997,
primarily as a result of robust market conditions during the first six months;
pressures experienced by the banks in the latter part of the year are not
likely to be fully reflected. 
Over the near term, a more challenging operating environment is likely to
dampen the performance of financial institutions in Hong Kong. Standard &
Poor's expects the banks' past strong profits and earnings retention as well
as their high levels of capital to cushion the anticipated downturn.
Nevertheless, a prolonged economic deceleration, a precipitous drop in
property prices, further tightening of liquidity, renewed interest-rate
volatility, and diminished market confidence could lead to a downward revision
in the banks' ratings, Standard & Poor's said. 


    RATINGS AFFIRMED; OUTLOOKS REVISED
                                  TO                FROM
    Dao Heng Bank Ltd.
    Counterparty credit rtg  BBB+/Negative/A-2   BBB+/Stable/A-2
    CDs                      BBB+/A-2            BBB+/A-2
    Sub debt                 BBB                 BBB
    International Bank of Asia
    Counterparty credit rtg  BBB/Negative/A-3    BBB/Stable/A-3
    CDs                      BBB/A-3             BBB/A-3
    GE Capital Finance Ltd.
    Counterparty credit rtg  A+/Negative/A-1     A+/Stable/A-1
    CDs                      A+/A-1              A+/A-1
    Sr unsecd                A+                  A+
    Sub debt                 A                   A
    Hongkong & Shanghai Banking Corp.
    Counterparty credit rtg  --/--/A-1+          --/--/A-1+
    CDs                      --/A-1+             --/A-1+



SOURCE  Standard & Poor's Rating Services 


    -0-                             03/22/98
    /CONTACT: Wayne K Gee of Standard & Poor's, New York, 212-208-1683/
    /Web site:  http://www.ratings.standardpoor.com/

CO:  Dao Heng Bank Ltd; International Bank of Asia; GE Capital Finance Ltd.;


 Hongkong & Shanghai Banking Corp.
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EOS   (PRN)    Mar/22/98    22:59      86
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-0- (PRN) Mar/22/98   23:14 
 
 
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