Fitch Rates United Overseas Bank (Thai)'s Basel III Tier 2 THB Notes at 'AA(tha)'

KEY RATING DRIVERS
The subordinated notes are rated two notches below UOBT's National Long-Term Rating to reflect their higher loss-severity risk relative to senior unsecured instruments arising from their subordinated status. The notes do not incorporate going concern loss absorption, and hence there is no additional notching for non-performance risk.

The terms and conditions of the notes include a non-viability trigger, which is defined in line with local standards as emergency capital assistance from the central bank or any other empowered government agency.

UOBT's ratings are driven by Fitch's view that the bank is a strategically important subsidiary of Singapore-based United Overseas Bank Limited (UOB; AA-/Negative). UOBT plays an important role in expanding the group's presence in south-east Asia. UOB owns 99.7% of UOBT, with clear branding linkages, management control, and significant levels of operational integration.

For further details on UOBT's key rating drivers and sensitivities, please refer to Fitch Affirms UOB Thai at 'A-' and 'AAA(tha)'; Outlook Stable, published 7 May 2021.

RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A downgrade of UOBT's National Long-Term Rating would lead to a downgrade of the Tier 2 notes.

There may be negative rating action on the bank's ratings if there were very substantial changes to UOB's ability to support UOBT. For example, the parent's international scale rating would have to be downgraded by multiple notches before there would be any impact on UOBT's National Long-Term Rating.

There may also be negative rating action if the parent's propensity to support UOBT declines, including a drop in UOB's shareholding to below 75%, combined with substantially reduced management control and integration. However, Fitch does not expect these changes in support propensity to occur in the medium term.

Factors that could, individually or collectively, lead to positive rating action/upgrade:
There is no upside to UOBT's Basel III Tier 2 subordinated debt instruments because the anchor rating, the bank's National Long-Term Rating, is at the top end of the scale.

DATE OF RELEVANT COMMITTEE
06 May 2021

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.

PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
UOBT's IDRs, Support Rating, and National Ratings are driven by the ratings of its parent United Overseas Bank Limited of Singapore.

ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com

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