Fitch Takes Rating Actions on HSBC's Latin American Subsidiaries

  Fitch Takes Rating Actions on HSBC's Latin American Subsidiaries

Business Wire

MONTERREY, Mexico & NEW YORK -- December 10, 2012

Fitch Ratings has taken various rating actions on the Latin America
subsidiaries of HSBC Holdings plc (HSBC), following the Dec. 7, 2012 downgrade
of HSBC's Long-term Issuer Default Rating (IDR) and Viability Rating (VR). The
rating actions on HSBC's Latin American subsidiaries differ across companies
and countries. A complete list of rating actions for each subsidiary follows
at the end of this press release.

On Dec. 7, 2012, Fitch downgraded HSBC's Long-term IDR to 'AA-' from 'AA'. The
Rating Outlook was revised to Stable from Negative. The Long-term IDR and VR
of HSBC were both downgraded as Fitch believes that the risks attached to the
group's expansion into higher-risk markets, including mainland China and
intensifying competition in Hong Kong are no longer sufficiently mitigated at
the HSBC Group level (please refer to 'Fitch Downgrades HSBC to 'AA-'; Outlook
Stable', dated Dec. 7, 2012, available at www.fitchratings.com).

In Fitch's view, HSBC's ability and propensity to provide support to its Latin
American subsidiaries remain strong, despite the recent downgrade. Most Latin
America subsidiaries are considered by Fitch as Strategically Important to
HSBC as they have built up a regional franchise by focusing mostly on retail
and corporate banking.

Fitch has taken rating actions on the following HSBC's subsidiaries:

HSBC MEXICO

HSBC Mexico's support rating and IDRs have been affirmed due to the strong
propensity of its ultimate parent, HSBC, to provide support to HSBC Mexico, if
this were needed. In Fitch's opinion, HSBC Mexico is a priority growth market
for HSBC and is a strategically important subsidiary. Therefore, its IDRs
could be as high as one notch below the parent's.

Despite the strong potential for support and still high rating of its parent,
relativities with the sovereign ratings have constrained the uplift for HSBC
Mexico's IDRs. This explains why HSBC Mexico's 'A' local currency IDR is not
affected by the recent downgrade of the parent, while the foreign currency IDR
at 'A-' remains capped by Mexico's country ceiling. HSBC Mexico's national
scale long- and short-term ratings were affirmed at 'AAA(mex)' and 'F1+(mex)',
respectively, since its IDRs are above those of the sovereign, and
national-scale ratings are relative rankings of creditworthiness within a
certain jurisdiction.

The affirmation of the ratings of HSBC Mexico's subordinated debt reflects
Fitch's opinion that support from HSBC, if needed, would extend to any
outstanding debt in the local market, in order to prevent negative effects on
its reputation and overall funding costs. Given the still relatively high IDR
of HSBC, the subordinated debt rating is equal to that of HSBC Mexico's senior
unsecured debt.

Ratings Sensitivities

A potential upgrade of Mexico's sovereign rating could positively affect HSBC
Mexico's IDRs if the parent remains rated in the 'AA' category. Conversely,
further downgrades of HSBC Holding's IDRs could potentially negatively affect
HSBC Mexico's rating and/or Rating Outlook. The national scale ratings could
be affected by a multi-notch downgrade of HSBC Holdings.

Given Fitch's criteria for rating bank hybrids and the non-performance risk of
these securities, the national scale ratings of HSBC Mexico's subordinated
debt could be affected by further downgrades of HSBC Holdings' Viability
Rating, even before such downgrade could affect the national scale issuer and
senior unsecured debt ratings, and/or the IDRs of HSBC Mexico.

HSBC CASA DE BOLSA

HSBC Casa de Bolsa is perceived by Fitch as a core affiliate of HSBC Mexico
and fully integrated into its operations and franchise. In addition, the local
holding company of both operating entities, Grupo Financiero HSBC, is legally
enforced to provide support to its subsidiaries. Therefore, the national scale
ratings of the brokerage unit are fully aligned with the bank's ratings.

Ratings Sensitivities

The ratings of HSBC Casa de Bolsa could be negatively affected by a
multi-notch downgrade of HSBC Holding's IDRs, or a change in the propensity of
the latter to support its Mexican subsidiaries. These ratings will likely
remain aligned with HSBC Mexico.

HSBC BANK (CHILE)

The downgrade of HSBC Bank (Chile)'s Long-term IDR is in conjunction with the
downgrade of HSBC. HSBC Bank (Chile)'s IDRs are supported by HSBC, primarily
reflecting its importance to the group. As such, HSBC Bank (Chile) IDRs will
move in tandem with HSBC's. In Fitch's opinion, HSBC Bank (Chile) is
considered by Fitch as a subsidiary of limited importance for HSBC, because of
its small size within the group and in their local market. Therefore its IDRs
could be as high as two notches below the parent's. Fitch does not maintain a
VR on HSBC Bank (Chile), as it does not view the company as a stand-alone
entity.

HSBC Bank (Chile)'s support rating and national scale ratings were affirmed
due to expected support from its parent. National scale ratings are relative
rankings of creditworthiness within a certain jurisdiction.

Ratings Sensitivities

HSBC Bank (Chile)'s IDRs would move in line with those of its parent. The
national scale ratings could be affected by a downgrade of HSBC.

HSBC BANK (PANAMA)

HSBC Bank (Panama)'s (HSBC Panama) IDRs and national ratings have been
affirmed. HSBC Panama is considered by Fitch as Strategically Important to
HSBC. This classification is based on Fitch's assessment of the role of HSBC
Panama in HSBC's strategy as a regional hub for funding and lending in
dollars, the reputational risk resulting from the shared franchise and
commercial name, the high level of management integration, and the capital and
funding facilities provided by its ultimate parent. HSBC Panama's IDRs could
be as high as two notches below the parent's. The current rating was
constrained by Fitch policies to rate above the sovereign (not more than three
notches at the most). After the downgrade of the parent, HSBC Panama supported
IDR of 'A' is aligned with the usual notching policy for Strategically
Important subsidiaries, and no longer constrained by Panama's Country Ceiling.

Ratings Sensitivities

HSBC Panama's current Long-term IDR is aligned with Panama's country ceiling.
Further downgrades on HSBC's IDR would result in a similar action on the
Panamanian bank's ratings.

HSBC BANK (URUGUAY) AND HSBC BANK (ARGENTINA) UNAFFECTED

Fitch currently rates other two bank subsidiaries of HSBC in Latin America:
HSBC Bank (Uruguay) (HSBC Uruguay) and HSBC Bank (Argentina) (HSBC Argentina).
Both entities were not included in this review given the significant
limitations to their supported IDR due the relatively low Country Ceiling
several categories below the rating of HSBC. In the case of HSBC Uruguay
(rated 'BBB; on Negative Rating Watch; Support Rating 2; 'AAA(ury)'; on
Negative Rating Watch;, it's IDR, Support, and National Scale Ratings were
placed on Rating Watch Negative on May 2012 (please refer to 'Fitch Places
HSBC Bank Uruguay on Rating Watch Negative', dated May 16, 2012) pending the
completion of the sale of the bank to the Colombian Banco GNB Sudameris. This
transaction is expected to be completed during the first half of 2013. In the
case of HSBC Argentina, its national scale long-term rating was downgraded to
'AA(arg)' on Nov 30, 2012, due to the recent sovereign downgrade (please refer
to 'Fitch Takes Actions on Argentina Banks after Sovereign Downgrade'; dated
Nov. 30, 2012 at www.fitchratings.com).

Fitch has taken the following rating actions:

HSBC Mexico:

--Long-term IDR affirmed at 'A-'; Outlook Stable;

--Short-term IDR affirmed at 'F1';

--Long-term local currency IDR affirmed at 'A'; Outlook Stable;

--Short-term local currency IDR affirmed at 'F1';

--Support Rating affirmed at '1';

--Long-term national-scale rating affirmed at 'AAA(mex)'; Outlook Stable;

--Short-term national-scale rating affirmed at 'F1+(mex)';

--Long-term national-scale rating for local senior unsecured debt issues
affirmed at 'AAA(mex)';

--Long-term national-scale rating for local subordinated debt issues affirmed
at 'AAA(mex)'.

HSBC Casa de Bolsa:

--Long-term national-scale rating affirmed at 'AAA(mex)'; Outlook Stable;

--Short-term national-scale rating affirmed at 'F1+(mex)';

HSBC Bank Chile

--Long-term foreign and local currency IDR downgraded to 'A' from 'A+';
Outlook revised to Stable from Negative;

--Short-term foreign and local currency IDR affirmed at 'F1';

--Long-term national rating affirmed at 'AAA(cl)'; Outlook Stable;

--Short-term national rating affirmed at 'N1+(cl)';

--Support Rating affirmed at '1'.

HSBC Bank (Panama):

--Long-term IDR affirmed at 'A'; Outlook Stable;

--Short-term IDR affirmed at 'F1';

--Support Rating affirmed at '1';

--Long-term national-scale rating affirmed at 'AAA(pan)'; Outlook Stable;

--Short-term national-scale rating affirmed at 'F1+(pan)'.

Additional information is available on www.fitchratings.com. The ratings above
were solicited by, or on behalf of, the issuer, and therefore, Fitch has been
compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 15, 2012);

--'National Ratings Criteria' (Jan. 19, 2011);

--'Rating FI Subsidiaries and Holding Companies' (Aug. 10, 2012);

--'Rating Financial Institutions Above the Local Currency Sovereign Rating'
(Dec. 20, 2011);

--'Assessing and Rating Bank Subordinated and Hybrid Securities ' (Dec. 5,
2012);

--'Treatment of Hybrids in Bank Capital Analysis' (July 09, 2012);

--'Securities Firms Criteria' (Aug. 15, 2012).

Applicable Criteria and Related Research:

Securities Firms Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686137

Assessing and Rating Bank Subordinated and Hybrid Securities

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=695542

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=686181

National Ratings Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=595885

Rating FI Subsidiaries and Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209

Rating Financial Institutions Above the Local Currency Sovereign Rating

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=657925

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS.
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK:
HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING
DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL,
COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM
THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Contact:

Fitch Ratings
Primary Analyst (HSBC Mexico and HSBC Casa de Bolsa)
Alejandro Garcia, CFA
Senior Director
+52 (81) 8399-9146
Fitch Mexico S.A. de C.V.
Prol. Alfonso Reyes 2612, Monterrey, N.L. Mexico.
or
Primary Analyst (HSBC Bank (Chile))
Santiago Gallo
Director
+54-11-5235-8137
Fitch Argentina Calificadora de Riesgo S.A.
Sarmiento 663 - piso 7 - C1041AAM
Buenos Aires, Argentina
or
Primary Analyst (HSBC Bank (Panama))
Diego Alcazar
Director
+1 212 908-0396
or
Secondary Analyst (HSBC Mexico and HSBC Casa de Bolsa)
Monica Ibarra (Analista Secundario)
Director
+52 (81) 8399-9150
or
Secondary Analyst (HSBC Bank (Chile))
Eduardo Santibanez
Director
+56-2-499-33-07
or
Secondary Analyst ((HSBC Bank (Panama))
Carmen Matamoros
Associate Director
+503 2516-6612
or
Committee Chairperson
Peter Shaw
Managing Director
+1 212 908-0553
or
Media Relations:
Elizabeth Fogerty, +1-212-908-0526 (New York)
elizabeth.fogerty@fitchratings.com
 
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