Moody's Investors Service has placed Citic Industrial Bank (CIB)'s credit ratings on review for a possible downgrade.
CIB, a medium-sized bank with more than 360 outlets in the mainland, is 100 per cent controlled by China International Trust and Investment Corp (Citic), China's largest investment firm under the State Council.
The review covers the bank's Baa3 long-term debt and deposit ratings, its short-term deposit rating of Prime-3 and its financial strength rating of D - all assigned by Moody's in 1997.
'The review reflects the large recapitalisation needs of CIB in view of its rapid growth and weak financial fundamentals,' Moody's said yesterday. It did not provide figures but analysts said CIB, together with most mainland banks, was largely under-capitalised.
Moody's said its review would focus on the outcome of the bank's capital injection from its parent, Citic, as well as examining its capital structure and its positioning amid fierce competition. 'Substantial new capital is required for CIB to sustain growth and manage its substantial non-performing loans,'' the ratings agency said.
'The complexity of state-owned enterprise restructuring and capital raising in China and their impact on CIB, as well as the evolving status of Citic and its ability to provide on-going support to CIB will also be important rating factors.'