Moody's Investors Service has placed under review the C+ Bank Financial Strength Rating ('BFSR') of HSBC Bank Middle East Limited (HBME) for a possible downgrade.

HBME is a wholly-owned subsidiary of HSBC Holdings, registered in the Channel Islands, with operations in the Middle East.

The BFSR maps to a Baseline Credit Assessment of A2 and benefits from a three-notch uplift to a long-term global local currency (GLC) deposit rating of Aa2.

The Aa2 long-term local currency rating and the foreign currency deposit and debt ratings were also placed under review for possible downgrade, the rating agency said.

Moody's expects to complete the review in April 2009. It said that the rating action reflects expected asset quality and profitability pressures in the countries that HBME operates.

The challenging operating environment in the UAE, which constitutes the largest part (around 70 per cent) of the company's operations, is regarded as more volatile, and the potential of rising delinquencies in the next 12-18 months is significantly enhanced.

The review will also consider the level of parental support incorporated in the debt ratings, given increasing pressures on the parent's ratings - as reflected in Moody's recent rating actions on HSBC Bank and HSBC Holdings.

The following ratings of HSBC Bank Middle East Limited were placed on review for possible downgrade:

*BFSR: C+

*Global Local Currency Deposit Ratings: Aa2

*Foreign Currency Deposit Ratings: Aa2

*Foreign Currency Debt Rating for senior debt obligations: Aa2

*Foreign Currency Debt Rating for subordinated obligations: Aa3

The bank's short-term local currency and foreign currency debt and deposit ratings remain unchanged at Prime-1.

The following ratings of HSBC Bank Middle East Limited (UAE Branch) were placed on review for possible downgrade:

*Global Local Currency Deposit Ratings: Aa2

*Foreign Currency Deposit Ratings: Aa2

The bank's short-term local currency and foreign currency deposit ratings remain unchanged at Prime-1.

The last rating action on HSBC Bank Middle East Limited was on May 6, 2008, when Moody's rated the senior debt of HSBC Bank Middle East Limited at Aa2.

HBME is one of the oldest international banks operating in the Middle East through a network of 44 branches throughout UAE, Oman, Bahrain, Qatar, Kuwait, Jordan, Lebanon, Pakistan, and Palestine.

It offers a full range of banking services in the Middle East. HBME reported total assets of $37.153 billion and total equity of $2.366 billion under IFRS as at year-end 2007.-TradeArabia News Service