Fitch downgrades HSBC

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Associated Press

Posted on December 7, 2012 at 1:02 PM

Updated Friday, Dec 7 at 1:06 PM

LONDON (AP) — Fitch Ratings has cut its debt rating on HSBC Holdings PLC, saying the risks attached to its expansion into higher-risk markets such as China is no longer sufficiently mitigated.

The credit ratings agency lowered HSBC's long-term issuer default rating to AA- from AA, but revised up its outlook on Europe's biggest bank from negative to stable.

Fitch added that HSBC's increasing costs of managing its diverse operations — from legal fees to compliance and governance expenses — will outweigh any previous benefits from the group's business and geographic diversification.

Last month, HSBC said it has set aside a further $1.15 billion to cover potential U.S. fines for failing to stop money-laundering in its Mexican unit and to compensate U.K. customers for mis-selling payment protection insurance.

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