Moody’s casts watchful eye on UOB
(6 December 2004 – Singapore) Ratings agency Moody’s has placed Singapore’s United Overseas Bank on review for a possible downgrade because of concern the bank is taking on too much risk.
Moody’s said UOB seemed willing to take on higher levels of risk than was consistent with its B+ bank financial strength Aa2 deposit ratings.
The ratings agency qualified the move by stating that Aa ratings implied very high certainty of outcomes, which were sensitive to relatively small increases in risk.
"UOB is increasing its exposures to riskier regional Asian markets, while at the same time reducing its historically very strong capital levels," Moody’s said.
It said UOB’s profitability appeared to be under more pressure than other Singapore banks and the bank’s asset quality was improving slowly compared to its peers.
"The review will focus on UOB’s risk appetite, the trends in its financial fundamentals and its plans for divesting its non-core assets," Moody’s said.
UOB has total assets of US$75 billion.
The ratings agency qualified the move by stating that Aa ratings implied very high certainty of outcomes, which were sensitive to relatively small increases in risk.
"UOB is increasing its exposures to riskier regional Asian markets, while at the same time reducing its historically very strong capital levels," Moody’s said.
It said UOB’s profitability appeared to be under more pressure than other Singapore banks and the bank’s asset quality was improving slowly compared to its peers.
"The review will focus on UOB’s risk appetite, the trends in its financial fundamentals and its plans for divesting its non-core assets," Moody’s said.
UOB has total assets of US$75 billion.
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