HSBC fears coronavirus could lead to credit rating downgrade
HSBC has warned that it faces a credit rating downgrade if officials cannot stop the spread of coronavirus in China.
Finance chief Ewen Stevenson told analysts last week that the bank could battle a ‘credit rating deterioration’ if the disruption is prolonged in Asia, where the lender makes most of its profits.
The bank said the virus could hit its revenue in Hong Kong, as it could leave customers struggling to meet loan repayments.
HSBC warns it faces a credit rating downgrade if the spread of coronavirus cannot be stopped
This would be particularly severe if the outbreak dragged on into the summer.
Noel Quinn, the stand-in chief executive of HSBC, said: ‘Our first priority is, obviously, the wellbeing of our people and our customers.
‘We will continue to do all we can to provide support and ensure their safety. There will inevitably be a short-term economic impact that will doubtless affect our clients, and we will do all that we can to support them.’
He said the bank would be forced to set aside $600 million (£450 million) to deal with loan losses if the virus’s spread continues to hurt businesses, consumers and supply chains in the second half of the year.
Last week Apple warned of an iPhone shortage after it was forced to stop production temporarily in China, and it shut many of its stores as the infection spread throughout the country.
Amazon has also warned companies that sell through its website to cancel orders or block purchases temporarily if they are disrupted by the deadly virus.
Amazon sellers fear they will not be able to replenish stock from China if factories remain closed to contain the spread of the virus.
HSBC declined to comment.