Well-known Chinese national weekly newspaper The Economic Observer recently reported that Moody’s has just downgraded the baseline credit assessments of China’s Bank of Communications (BOCOM) from Baa3 to Ba1, which is often known as the “garbage level.” BOCOM was founded in 1908 (Qing Dynasty) and is currently the fifth largest bank in China, with 3,285 domestic outlets and 20 international branches. BOCOM’s total asset value (2016) was around US$1,296.5 billion. Moody’s cited BOCOM’s poor financing capabilities and higher-than-average financing costs, as well as a declining number of savings accounts, as the reason for the downgrade. A few other performance indicators also showed that the bank is facing much higher market risks. BOCOM responded immediately by suggesting that Moody’s focused too much on very few indicators and the downgraded rating was biased. It is worth noting that BOCOM’s rating for its long-term outlook remains at A3.
Source: The Economic Observer, September 8, 2017
http://www.eeo.com.cn/2017/0908/312397.shtmli