Fitch Ratings has placed DBS Bank (Hong Kong) Limited's (DBSHK) Long-Term Issuer Default Rating (IDR) of 'AA-' on Rating Watch Negative (RWN). Fitch has also affirmed DBSHK's Short-Term IDR at 'F1+' and Support Rating at '1'.

The rating actions follow the placement of its Singapore-based parent DBS Bank Ltd.'s (DBS) Long-Term IDR of 'AA-' and Viability Rating of 'aa-' on RWN due to increased near-term downside risks following the economic downturn stemming from the coronavirus pandemic. See 'Fitch Places DBS's and DBSH's 'AA-' Long-Term IDRs on Rating Watch Negative', published on 29 April 2020 at www.fitchratings.com/site/pr/10120196.

KEY RATING DRIVERS

IDRS AND SUPPORT RATING

DBSHK's IDRs and Support Rating reflect Fitch's view of an extremely high probability of extraordinary support from its parent DBS, if required. DBSHK's IDRs are equalised with those of DBS, as DBSHK plays an integral role in supporting its parent's expansion into greater China, a key area of focus for the parent. DBSHK is the largest overseas subsidiary of DBS and its location in Hong Kong, a key wealth-management hub in Asia, puts it in a strong position to capture business from the increasingly affluent population in Hong Kong and mainland China.

The single management team at DBSHK and DBS's Hong Kong branch suggests a high level of integration and strategy within DBS as a whole. We believe the propensity of DBS to support DBSHK remains very high as Hong Kong is consistently the second-largest profit contributor to the group by geography, with DBSHK contributing 13% of assets and 15% of profit at end-2019. We believe the reputational damage to DBS would be huge if support were not extended to the Hong Kong subsidiary should it be required.

RATING SENSITIVITIES

IDRS AND SUPPORT RATING

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Positive rating action on the IDRs is unlikely given the RWN placed on DBSHK and its parent DBS.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

We will resolve the RWN upon the resolution of the RWN on parent DBS, which is expected in the next six months. Any negative rating action on DBS's IDRs and VR will lead to downgrade of DBSHK's IDRs. They could also be triggered if Fitch believes that the parent's propensity to support DBSHK has diminished because of strategic considerations, and it may affect the Support Rating if the change in propensity is significant. However, Fitch does not consider this to be likely in the medium term.

ESG CONSIDERATIONS

The highest level of ESG credit relevance, if present, is a score of 3. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity(ies), either due to their nature or to the way in which they are being managed by the entity(ies). For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

BEST/WORST CASE RATING SCENARIO

International scale credit ratings of Financial Institutions issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

RATING ACTIONS

ENTITY/DEBT	RATING		PRIOR
DBS Bank (Hong Kong) Limited	LT IDR	AA- 	Rating Watch On		AA-
ST IDR	F1+ 	Affirmed		F1+
Support	1 	Affirmed		1

VIEW ADDITIONAL RATING DETAILS

Additional information is available on www.fitchratings.com

(C) 2020 Electronic News Publishing, source ENP Newswire