Ratings agency Moody’s yesterday downgraded Bermuda Commercial Bank’s long term deposit and issuer ratings.

The agency set BCB at Ba3, down from of the previous Ba2 rating, while its stand-alone baseline credit assessment dropped from ba2 to ba3 and set its counterparty risk at Ba2 from Ba1.

The move came after a review launched last September following BCB’s acquisition of 75 per cent of British finance house Private and Commercial Finance Group.

In a statement Moody’s said: “The ratings downgrade reflects Moody’s view that BCB has taken on increased asset risk through its acquisition of PCFG that has raised the bank’s overall risk profile despite its strong capitalisation.

“Moody’s notes that the increased asset risk reflects the nature of PCFG’s loan portfolio, consisting of high yield, high loan-to-value consumer auto finance and small and medium-sized enterprise business and leasing finance.”

The agency added: “These loans carry a much higher level of delinquent and impaired loans and a higher loss content than do BCB’s commercial loans in Bermuda.”

The bank’s short term ratings and counterparty risk assessment of Not Prime and Not Prime (counterparty risk) respectively were affirmed and the outlook for the ratings was assessed as stable.