Wed, Aug 02, 2006 - Page 12 News List

Moody's lowers rating on Chinatrust

By Amber Chung  /  STAFF REPORTER

Moody's Investors Services announced yesterday that it had downgraded its outlook rating on Chinatrust Commercial Bank (中國信託商銀), the nation's biggest credit card issuer, after it received penalties from the financial regulator.

Moody's revised downward the bank's outlook to "stable" from "positive" but made no changes in the lender's long-term and short-term deposit ratings of A3 and P-1, or the rating of its parent Chinatrust Financial Holding Co (中信金控), the rating services provider said in a statement released yesterday.

"Questions raised by the regulatory sanctions over the effectiveness of the bank's compliance and corporate governance framework, as well as its ongoing communication with the regulator, rule out a positive outlook at this time," Moody's said.

Moody's is the first rating agency to downgrade Chinatrust Commercial after the Financial Supervisory Commission imposed a series of penalties on the lender last month for its irregularities and misuse of funds in relation to its parent company's investment in rival Mega Financial Holding Co (兆豐金控).

The commission suspended approval of the finance group's fundraising and expansion applications until improvements were made in risk management and corporate governance.

Jeffrey Koo Jr (辜仲諒) was forced to step down as Chinatrust Commercial's chairman and board director.

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