Standard & Poor's Ratings Services said Thursday it had revised the outlook on its 'BB' long-term foreign currency counterparty credit rating on Bank of Communications in Hong Kong to positive from stable after taking into consideration recent improvements in the bank's capital and asset quality.

The bank's capital has been strengthened by 18 billion yuan (2.16 billion US dollars) in capital injections from the Chinese Ministry of Finance, its major shareholder, and other government linked agencies, and further augmented by an acquisition of a 19.9 percent interest in Bank of Communications by Hongkong and Shanghai Banking Corp. Ltd (HSBC Asia Pacific).

The transaction makes HSBC Asia-Pacific Bank of Communication's second-largest shareholder, after the ministry.

Prior to the transaction, the Bank of Communications had sold asignificant amount of non-performing loans to an asset management company, which helped the bank to lower its reported non-performing loans to 19.8 billion yuan (2.38 billion US dollars) asat June 30,2004.

Standard & Poor's is continuing to assess the ramifications of the acquisition on bank's credit profile against the backdrop of other anticipated improvements in the bank's financial metrics.

HSBC Asia-Pacific is in a position to extend technical and management support that would help improve Bank of Communications' performance over the long term.

Source: Xinhua