Crisil downgrades eight Indian affiliates of global financial entities

Credit rating agency Crisil has downgraded its long-term debt ratings on eight Indian affiliates of global financial entities.

Theses include Barclays Bank PLC, Barclays Investments & Loans (India) Limited, Citibank NA, Citicorp Capital Markets Limited, Citicorp Finance India Limited, Citicorp Maruti Finance Limited, Citifinancial Consumer Finance India Limited, Deutsche Bank AG, Deutsche Investments India Private Limited, Deutsche Securities India Private Limited, The Hongkong & Shanghai Banking Corporation Limited and JP Morgan Securities India private Limited.

The downgrades take into account factors like assessment of the current weak global operating environment and its impact on the business and credit profiles of global financial institutions, recent rating changes by Standard & Poor?s (S&P) on large global financial institutions, translation of the revised S&P ratings of the Indian affiliates’ parents onto rating scale and the standalone credit quality of the respective Indian operations.

However, the long-term rating on the Indian operations of The HongKong & Shanghai Banking Corporation has also been reaffirmed, at AAA/Stable.

Raman Uberoi, senior director, Crisil said, ?The operating environment for the global financial sector has become far more challenging and uncertain than before. Most large and complex global financial institutions continue to face severe earnings and asset quality pressures, reflected in the recent changes in their S&P ratings, and in the continuing negative outlooks on many of these ratings. Given these pressures, Crisil has made changes in the levels at which it translates global ratings of financial institutions onto the Crisil rating scale.?

Tarun Bhatia, head – financial sector ratings, Crisil, ?Crisil’s ratings incorporate the expectation that the parents will treat the debt of their Indian subsidiaries as their own debt. The expectation of such continued support significantly offsets the impact of any existing or potential deterioration in the standalone performance of the Indian entities.?

Crisil believes that most non-banking financial companies in India, including those promoted by global parents, face challenges because of the sluggish business environment.

Their lack of flexibility to raise resources because of their weakened business profiles and dependence on wholesale funding would result in slower business volumes and increased borrowing costs.