Moody's cuts Chinatrust Commercial Bank

Moody's Investors Service said it downgraded Chinatrust Commercial Bank, Hong Kong branch's hybrid securities, in line with its revised guidelines for rating bank hybrids and subordinated debt published in November 2009.

Moody's said it downgraded the bank's upper tier II capital-qualifying subordinated debt securities with cumulative deferral features to Baa3 from Baa1. This concludes the review for possible downgrade that began in November. All other ratings remain unchanged.

The outlook remains stable.

Prior to the global financial crisis, Moody's said it incorporated into its ratings an assumption that support provided by national governments and central banks to shore up a troubled bank would benefit the subordinated debt holders and senior creditors.

The systemic support for these instruments has not been forthcoming in many cases, so the agency said it revised its methodology to remove previous assumptions of systemic support.

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