5 Thai sub­sidiaries of for­eign banks af­firmed

The Pak Banker - - 6BUSINESS -

Credit rat­ing agency Fitch has af­firmed the Na­tional Long-Term rat­ings of five Thai sub­sidiaries of for­eign- owned banks. United Over­seas Bank ( Thai) Pub­lic Com­pany Limited (UOBT), In­dus­trial and Commercial Bank of China (Thai) Pub­lic Com­pany Limited (ICBCT) and ICBC (Thai) Leas­ing Com­pany Limited (ICBCTL) have been af­firmed at 'AAA(tha)'; May­bank Kim Eng Se­cu­ri­ties (Thai­land) Pub­lic Com­pany Limited (MBKET) af­firmed at 'AA(tha)' and CIMB Thai Bank Pub­lic Com­pany Limited (CIMBT) af­firmed at 'AA-(tha)'. The Out­looks are Sta­ble, ex­cept for the rat­ing on MBKET, which has a Neg­a­tive Out­look.

Credit rat­ing agency Fitch has also af­firmed UOBT's and CIMBT's Long-Term For­eign- Cur­rency IDR at ' A-' and ' BBB', re­spec­tively.

The Na­tional rat­ings of UOBT, ICBCT, MBKET, and CIMBT, as well as the IDRs and Sup­port Rat­ings of UOBT and CIMBT, re­flect Fitch's be­lief of a high prob­a­bil­ity of ex­traordi- nary sup­port, if re­quired, from their re­spec­tive par­ent banks, United Over­seas Bank Limited (UOB; AA-/Sta­ble), In­dus­trial and Commercial Bank of China (ICBC; A/Sta­ble), Malayan Bank­ing Ber­had (May­bank; A-/Neg­a­tive), and CIMB Bank Ber­had (CIMB). Fitch con­sid­ers the Thai sub­sidiaries to be strate­gi­cally im­por­tant to the par­ents due to the high lev­els of op­er­a­tional in­te­gra­tion, past his­to­ries of fi­nan­cial sup­port and near-full own­er­ship.

The Na­tional rat­ings of ICBCTL re­flect Fitch's view that it is a core sub­sidiary of ICBCT. ICBCTL has a key role in im­ple­ment­ing the bank's re­tail strat­egy and its con­tri­bu­tion to the bank is sub­stan­tial. ICBCTL ac­counted for 38% of ICBCT's con­sol­i­dated loan port­fo­lio as of end-2013.

The Out­looks for UOBT, ICBCT, ICBCTL, and MBKET are con­sis­tent with that of their par­ents. The Sta­ble Out­look for CIMBT re­flects Fitch's ex­pec­ta­tion that the par­ent bank's abil­ity and propen­sity to pro­vide ex­tra­or­di­nary sup­port to CIMBT is un­likely to change over the next one to two years.

UOBT's Vi­a­bil­ity Rat­ing (VR) of

'bb+' re­flects its mod­est (though im­prov­ing) do­mes­tic fran­chise, and weaker fund­ing and prof­itabil­ity com­pared with higher- rated Thai banks. It also takes into con­sid­er­a­tion UOBT's sound risk man­age­ment cul­ture and ef­fec­tive sys­tem ( sup­ported by UOB), as well as UOBT's strong cap­i­tal po­si­tion.

CIMBT's VR of 'bb-' is based on its limited fran­chise, as well as rel­a­tively weaker as­set qual­ity and cap­i­tal­i­sa­tion in­di­ca­tors com­pared with lo­cal and in­ter­na­tional peers. There have been some im­prove­ments in key fi­nan­cial mea­sures, and Fitch ex­pects CIMBT's over­all credit pro­file to re­main in line with sim­i­larly rated peers.

CIMBT's Thai baht-de­nom­i­nated sub­or­di­nated Up­per Tier 2 debt is cur­rently rated two notches be­low CIMBT's Na­tional Long-term Rat­ing, based on the debt's sub­or­di­na­tion and coupon de­fer­ral fea­ture. Its sub­or­di­nated un­se­cured debt (Lower Tier 2) is rated one notch be­low. The notch­ing for these debts in­stru­ments re­flects their sub­or­di­na­tion in the cap­i­tal struc­ture and is in line with Fitch's rat­ing ap­proach for such in­stru­ments.

Neg­a­tive rat­ing ac­tion on the IDRs on UOB, ICBC, and May­bank could lead to sim­i­lar ac­tion on their sub­sidiaries' rat­ings. A ma­te­rial change in the par­ent banks' abil­ity and/ or propen­sity to sup­port their Thai sub­sidiaries could also have an im­pact on the sub­sidiaries' rat­ings. For ex­am­ple, a sig­nif­i­cant re­duc­tion in group share­hold­ing in the sub­sidiary could re­sult in neg­a­tive rat­ing ac­tion.

A ma­te­rial im­prove­ment in CIMB's credit pro­file may re­sult in an up­grade of CIMBT's IDRs and Na­tional Rat­ings; con­versely a sig­nif­i­cant de­te­ri­o­ra­tion may re­sult in down­grades. Since UOBT's Long-Term For­eign­Cur­rency IDR is con­strained by Thai­land's 'A-' coun­try ceil­ing, any changes in the coun­try ceil­ing could lead to com­ple­men­tary move­ments at UOBT's IDR. The Na­tional LongTerm Rat­ings for UOBT, ICBCT, and ICBCTL are al­ready the high­est on the na­tional scale, and hence there is no upside. An up­grade of Thai­land's Long-Term Lo­cal-Cur­rency IDR, while ICBC's rat­ings re­main un­changed, may re­sult in a down­grade of ICBCT's and ICBCTL's Na­tional Rat­ings.

Newspapers in English

Newspapers from Pakistan

© PressReader. All rights reserved.