Citing the departure of thousands of expatriates, unemployment as high as 12 percent, and a sharp and extended slowdown in the property market, Standard & Poor’s lowered its ratings on HSBC Bermuda and Butterfield Bank, with negative outlooks.The international ratings agency said unofficial estimates put Bermuda’s unemployment rate closer to 12 percent.And S&P believes it could climb to 14 percent by the end of 2014.It is concerned too that there could be significant losses in the hospitality and construction loan portfolio over the next few years.S&P said it estimates that nonperforming assets (NPA)-to-loan ratios have risen to roughly 10 percent in the industry, including restructured loans, and could deteriorate further through 2013 and next year, before showing signs of stabilisation in 2015.“In aggregate, we estimate that the Bermudian banking sector is less than half way through our full-cycle loan-loss projection of $450 million to $500 million by year-end 2015,” S&P said.The agency stated: “In our view, economic risks for Bermudian banks have increased, partly as a result of the departure of a few thousand expatriates, increased and high unemployment levels, and a very sharp and extended slowdown in the real estate market during the past few years.“As a result, nonperforming loans and credit losses within the Bermudian banking industry have increased substantially.”S&P added: “Moreover, we assess the trend for economic risks to be negative largely based on our projections for unemployment and economic growth.”S&P lowered the ratings on HSBC Bermuda to ‘A from ‘A+ and on Butterfield by one notch to BBB+ from A-.S&P said it also revised its Banking Industry Country Risk Assessment (BICRA) on Bermuda to group ‘4’ from group ‘3’ due to our weaker assessment of Bermuda’s economic risk.(See Business, Page 13 for more on S&P’s report and HSBC and Butterfield’s response.)