Moody’s Investors Service has lowered Citibank Korea’s global local currency (GLC) deposit rating to A2 from A1. The revised rating carries a stable outlook.
Meanwhile, Citibank Korea’s bank financial strength rating (BFSR) of C- and baseline credit assessment (BCA) of Baa1 remain on review for possible downgrade. Other ratings are unaffected.
The action follows Moody’s rating actions on Citigroup and its related entities taken on February 27, 2009. See press release of February 27, 2009, for greater discussion of the changes.
“The lower GLC deposit rating reflects changes in inputs for the Joint Default Analysis methodology. As parent Citibank N.A.’s BCA has been lowered to Baa2 from Baa1, the rating of the support provider for Citibank Korea has also been reduced,” says Beatrice Woo, a Moody’s VP/senior credit officer.
“In addition, Moody’s believes that the capacity for Citibank N.A. to provide support to Citibank Korea is diminishing, given the former’s weaker stand-alone financial health, thereby also reducing the probability of parental support for Citibank Korea. Both of these factors result in a lower GLC deposit rating for Citibank Korea,” says Woo, also Moody’s lead analyst for the bank. “Nonetheless, Citibank Korea’s GLC deposit rating still benefits from Korean government systemic support, the likelihood of which Moody’s assesses to be very high.”
The continuing review of Citibank Korea’s BFSR and BCA will assess any potential fall-out on its financial profile — including funding, operations and business performance – from further deterioration in its parent’s stand-alone creditworthiness. The review will also consider the impact of the parent’s proposed global business line reorganization on the Korean franchise.
The last rating action on Citibank Korea was taken on January 20, 2009, when its BFSR of C- and BCA of Baa1 were placed on review for possible downgrade. At the same time, the bank’s GLC deposit rating of A1 and foreign currency long-term/short-term deposit ratings of A2/Prime-1 were affirmed. The ratings carried stable outlooks. These actions followed Moody’s rating actions on Citigroup and its related entities taken on January 16, 2009.
The following rating was changed:
GLC deposit lowered to A2 from A1; outlook stable
The following ratings remain on review for possible downgrade:
BFSR of C-
BCA of Baa1
The following ratings were unaffected:
Foreign currency long-term/short-term deposit of A2/Prime-1; outlooks stable
D.C.