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Home > Feature Article > > Content
Morningstar Launches Global Bank Corporate Credit Ratings
Jessie Yung 2011-10-10

In late 2009, Morningstar announced the launch of corporate credit ratings in US, initiating coverage on 100 firms. Since then, we've published ratings on nearly 700 firms across a variety of industries, including the July 2010 launch of our US bank credit ratings. We are now pleased to announce that we are adding global banks to this roster of companies, albeit with a few modifications to our U.S. bank rating methodology.

 

There are total 25 global banks for this new adding of corporate credit ratings. No global banks received an AAA, our highest rating, and there are 5 banks rated as A+, including world leading brands HSBC and Standard Chartered.

 

Jim Leonard, banking credit analyst at Morningstar, comments:

 

HSBC is among the best-capitalised global banks, especially considering its lower-risk business model. We're especially fond of its strong deposit funding base, which is much more stable than the wholesale funding used extensively by most of its peers. However, the business is exposed to nearly every economy in the world, and the global slowdown has negatively affected its results. We are also concerned with the possibility of a bubble forming in Asia where HSBC has significant exposure. We are initiating credit coverage of HSBC Holdings HSBA with an issuer rating of A+.”

 

Standard Chartered’s strategy is to continue to build out its network in Asia, Africa, and the Middle East, so its fortunes are closely tied to the economic health of these occasionally unstable regions. In our Stress Test analysis, we assigned an average underwriting rating for most of Standard Chartered’s loans and an above average rating for most of its securities. The company received a score of very good in the Stress Test as its strong initial capital levels experienced only a slight loss of capital under our stress-case assumptions. It achieved a good Solvency Score as its sound capital position and excellent deposit to loan ratio were only slightly hampered by marginal reserves. We awarded Standard Chartered a good Business Risk score due to its size, geographic diversification and narrow economic moat. These factors led to a rating of A+.”

 

Below is the complete list of 25 new adding global banks and their ratings.

 

Bank

Credit Rating

Domicile Country

Credit Suisse

A+

Switzerland

HSBC

A+

UK

Julius Baer

A+

Switzerland

Standard Chartered

A+

UK

Svenska Handelsbanken

A+

Sweden

BNP Paribas

A

France

Deutsche Bank

A

Germany

Skandinaviska Enskilda Banken

A

Sweden

UBS

A

Switzerland

Banco Santander Chile

A-

Chile

Barclays

A-

UK

Credit Agricole

A-

France

Societe Generale

A-

France

Banco Bilbao Vizcaya Argentaria

BBB+

Spain

Banco Bradesco

BBB+

Brazil

Banco Santander

BBB+

Spain

Banco Santander Brasil

BBB+

Brazil

Commerzbank

BBB+

Germany

Itau Unibanco Holding

BBB+

Brazil

Royal Bank of Scotland

BBB+

UK

Intesa Sanpaolo

BBB

Italy

KBC Group

BBB

Belgium

Lloyds Banking Group

BBB

UK

UniCredit

BBB

Italy

Banco Popular Espanol

BBB-

Spain

 

For further background information of our credit rating, please click here for our detailed article.

 

Morningstar’s methodology for rating global banks emphasises economic moats and competitive analysis, a bank's ability to handle stress-case scenarios, and the overall solvency of the bank. The methodology also incorporates country risk into the Business Risk Score, and the Distance to Default methodology uses a market-based approach utilising credit spreads.

 

For a copy of Morningstar’s corporate credit ratings methodology, please click here.




hkresearch2@morningstar.com