Haitong Bank S.A.

The negative outlook on HB reflects the pressures we see on the SACP of its ultimate parent, HTS. We could lower the rating in the next 12-18 months if we think the parent's capacity to support its Portuguese subsidiary had decreased. Specifically, this could occur if we were to downgrade HTS. Although not our base-case scenario, we could lower our ratings on HB if its importance to HTS diminishes. We could revise the outlook to stable over the next 12-18 months if we foresaw a material reduction in risks to HTS' SACP. The 'bbb-' anchor for Haitong Bank is based on our industry risk score of '5' for Portugal (on a scale from '1' to '10', with '1' being the

...The rating on Haitong Bank (HB) is primarily supported by the bank being a strategically important subsidiary of higher-rated Haitong Securities Co. Ltd (HTS). The '##' rating, two notches above the bank's stand-alone credit profile (SACP), reflects our view that HB remains a strategically important subsidiary of HTS. This is because HB is a wholly owned subsidiary of HTS and benefits from funding guarantees and capital injections, demonstrating the parent's commitment and financial support. HB's more limited scale than larger domestic and foreign competitors, along with weaker efficiency and profitability, constrain its business competitiveness. Since its acquisition from HTS in 2015, HB has simplified its structure and has undertaken several transformation plans to achieve a profitable business model. Since 2021, the management team has consistently focused on strengthening domestic operations and developing cross-border activities with Chinese...

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