Fitch Ratings lowered Bank of East Asia's rating outlook to negative from stable yesterday after the bank suffered a significant run on deposits last week due to rumours it faced financial difficulties.
'It is difficult to determine the level of damage incurred by the bank's franchise,' the rating agency said. But it added that BEA was financially sound and expected it would still achieve a net profit this year.
Fitch said the run came after a string of negative news, including its substantial exposure to and losses on US collateralised debt obligations, a significant fraud in its treasury operations and some limited exposure to Lehman Brothers and American International Group.
However, it affirmed the bank's long-term issuer default rating of A-minus and left the short-term rating of F2 unchanged. Shares of BEA fell 5.22 per cent yesterday to end at HK$24.50.
Moody's Investors Service lowered BEA's rating outlook from stable to negative on September 19. This came after Standard & Poor's placed the bank's rating under credit watch for a possible downgrade.
Separately, shares of Dah Sing Financial Holdings dropped 15.13 per cent to HK$33.65 yesterday. Dah Sing Banking Group fell 9.12 per cent to HK$8.57 after it said it had exposure of HK$362 million to Washington Mutual Bank, a unit of Washington Mutual, which filed for bankruptcy protection last week.