CHINA'S four debt-burdened specialised banks have received low E-plus ratings for their 'stand-alone' strength from Moody's Investors Service. It issued the ratings to the four specialised banks - Bank of China, Industrial and Commercial Bank of China, People's Construction Bank of China and Agricultural Bank of China - and to a commercial bank, Bank of Communications. Moody's, which is issuing bank financial strength ratings (BFSRs) to 600 banks worldwide, has already given ratings to Australian, Japanese, and US banks, plus Hongkong Bank and Hang Seng Bank. The highest strength rating is A and the lowest is E. The average rating for US banks is C-plus, the average for Japan's banks is D. Hong Kong banks, of which only Hongkong Bank and Hang Seng Bank have been rated, averaged a B grade. The ratings are designed to offer investors a measure of a bank's 'intrinsic safety and soundness' on a strict legal-entity basis. Ratings are globally comparable across nations and currencies. The Bank of Communications received a D-plus, the highest of the five. Moody's said the Bank of Communications' rating reflected 'a comparatively small portfolio of policy loans and the bank's adequate financial fundamentals'. Next was Bank of China, which received a D. Agricultural Bank, Industrial and Commercial Bank and People's Construction Bank were rated E-plus. It said the four specialised banks were 'heavily burdened with policy loans to state-owned enterprises'. A bank rated D possesses 'adequate financial strength, but may be limited by one or more of the following factors: a vulnerable or developing business franchise, weak financial fundamentals, or an unstable operating environment'. Banks rated E 'possess very weak intrinsic financial strength, requiring periodic outside support or suggesting an eventual need for outside assistance,' Moody's said. 'Such institutions may be limited by one or more of the following factors: a business franchise of questionable value, financial fundamentals that are seriously deficient in one or more respects, or a highly unstable operating environment,' the agency said. One banker said the ratings would make no difference to the specialised banks and Bank of Communications, because they applied mainly to long-term, off-balance-sheet items, to which none of the banks had much exposure. China's banking sector has been under the spotlight this year, with Moody's issuing a report in January reviewing the impact of economic reforms on Industrial and Commercial Bank, Bank of China, Agricultural Bank and People's Construction Bank. In that report it said the specialised banks' needed a structural overhaul of their management information systems, their internal organisation and reporting processes, their human resources and their asset and liability management systems. The report predicted that their profitability would remain 'mediocre' in the near term. In April, Moody's cut the long-term bond ratings of Bank of China, Bank of Communications, People's Construction Bank and Industrial and Commercial, from A3 to Baa1. The downgrade forced the Bank of China to cancel a record-breaking $5 billion floating-rate certificate of deposit issue. Moody's said it began assigning the strength ratings in response to frequent requests from bank investors for its assessment of what a bank's credit profile would be without a reference to support mechanisms, ownership or membership of a banking group.