Fitch Affirms 4 Thai Subsidiaries of Foreign Financial Institutions
Fitch Ratings has affirmed the International and National Long-Term Ratings on four Thai subsidiaries of foreign financial institutions as follows:
- United Overseas Bank (Thai) Public Company Limited's (UOBT) Long-Term Foreign-Currency Issuer Default Rating (IDR) and National Long-Term Ratings have been affirmed at 'A-' and 'AAA(tha)', respectively. The Outlook is Stable.
- CIMB Thai Bank Public Company Limited's (CIMBT) National Long-Term Rating has been affirmed at 'AA-(tha)' with a Stable Outlook.
-CIMB Securities (Thailand) Co., Ltd.'s (CIMBS) National Long-Term Rating has been affirmed at 'AA-(tha) with a Stable Outlook.
-Maybank Kim Eng Securities (Thailand) Public Company Limited's (MBKET) National Long-Term Rating has been affirmed at 'AA(tha)' with a Negative Outlook.
Fitch Ratings has also assigned to UOBT's planned issuance of senior unsecured debentures a National Long-Term Rating of 'AAA(tha)'. The debentures, which will be issued in tranches and have tenor of up to five years, will have a total issue size of up to THBCIMB Thai BankUnited Overseas Bankbn. The proceeds from the issue will be used for general corporate purposes and refinancing.
A full list of rating actions is included at the end of this commentary.
KEY RATING DRIVERS
IDRS, NATIONAL RATINGS AND SUPPORT RATINGS
The ratings on the four companies are driven by parental support, as Fitch believes that these are strategically important subsidiaries of their respective groups. UOBT is owned by United Overseas Bank Limited (UOB; AA-/Stable); CIMBT is owned by CIMB Bank Berhad (CIMB) and CIMBS is owned by CIMB Securities International Pte (CSI), which is ultimately owned by CIMB Group Holding Berhad; and MBKET is ultimately owned by Malayan Banking Berhad (Maybank; A-/Negative). The parental support is evident from the majority stakes or near-full ownership in the subsidiaries, full management control, name- and brand-sharing, strong levels of integration, and a history of operational and financial support from the parents to these subsidiaries.
The Negative Outlook at MBKET is consistent with the Outlook of its ultimate parent, Maybank.
VIABILITY RATINGS (VR)
UOBT's VR reflect the bank's reasonable asset quality and financial buffers, particularly in terms of capitalisation and reserve coverage ratio. The VR also incorporates its relatively small local franchise and lower profitability compared with local peers.
SENIOR DEBT
The senior debt ratings of UOBT, CIMBT and MBKET are consistent with their National Ratings as senior debts represent unsecured and unsubordinated obligations of the borrower.
SUBORDINATED UNSECURED DEBTS
CIMBT's subordinated unsecured debts (Lower Tier Fitch Ratings, Basel II compliant instruments) are rated one notch below the bank's National Long-Term Rating. The notching for these debt instruments reflects their subordination in the capital structure and is in line with Fitch's rating approach for such instruments.
RATING SENSITIVITIES
IDRS, NATIONAL RATINGS AND SUPPORT RATING
Any change in UOB's IDRs would be unlikely to affect UOBT's Long-Term Foreign-Currency IDR as it is currently capped by Thailand's Country Ceiling of 'A-'. The National Ratings and Support Ratings on UOBT are already at the top end of the scale and no upside is possible. A downgrade of Thailand's Country Ceiling would have a similar effect on UOBT's Long-Term Foreign-Currency IDR and Support Rating.
Material changes in the credit profile at CIMB are likely to have a similar effect on the National Ratings of CIMBT and CIMBS.
Any changes in the ratings at Maybank may lead to change on the National Ratings of MBKET.
An indication of material weakening of any of the parents' propensity to provide extraordinary support to their respective subsidiaries could result in a downgrade in their National Ratings. For example, this could be indicated by a significant reduction in ownership or level of commitment to provide financial support. However, Fitch does not view this as likely in the near term.
VIABILITY RATINGS
UOBT's VR could see upside if the bank shows improved profitability without any compromises on risk appetite, as well as evidence of a better liquidity and funding situation compared to similarly sized peers. Negative rating action on the VR could result if there is a severe and potentially long-lasting deterioration in key financial metrics such as performance, asset quality, and capitalisation.
SENIOR DEBT
An upgrade of the National Ratings could have similar effect on the senior debt rating of MBKET. The National Long-Term Rating on UOBT's senior unsecured debt and the National Short-Term Rating on CIMBT's senior unsecured debts are currently at the highest on Thailand's National Rating scale; hence, there is no potential upside. The downgrade in the National Ratings of UOBT, CIMBT and MBKET would lead to a downgrade on their senior debt ratings.
SUBORDINATED UNSECURED DEBTS
Any change in CIMBT's National Long-Term Rating would affect the rating of its subordinated debt to a similar extent.
The rating actions are as follows:
UOBT:
- Long-Term Foreign-Currency IDR affirmed at 'A-'; Outlook Stable
- Short-Term Foreign-Currency IDR affirmed at 'FFitch Ratings'
- Viability Rating affirmed at 'bb+'
- Support Rating affirmed at 'CIMB Thai Bank'
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'FCIMB Thai Bank+(tha)'
- National Long-Term Rating on senior unsecured debts (outstanding notes) affirmed at 'AAA(tha)'
- National Long-Term rating on senior unsecured debts (planned new issuance) assigned at 'AAA(tha)'
CIMBT:
- National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'FCIMB Thai Bank+(tha)'
- National Short-Term Ratings on short-term debt affirmed at 'FCIMB Thai Bank+(tha)'
- National Long-Term Rating on subordinated debt (Lower Tier Fitch Ratings) affirmed at 'A+(tha)'
CIMBS:
- National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'FCIMB Thai Bank+(tha)'
MBKET:
- National Long-Term Rating affirmed at 'AA(tha)'; Outlook Negative
- National Short-Term Rating affirmed at 'FCIMB Thai Bank+(tha)'
- National Long-Term Rating on senior unsecured debt affirmed at 'AA(tha)'
- United Overseas Bank (Thai) Public Company Limited's (UOBT) Long-Term Foreign-Currency Issuer Default Rating (IDR) and National Long-Term Ratings have been affirmed at 'A-' and 'AAA(tha)', respectively. The Outlook is Stable.
- CIMB Thai Bank Public Company Limited's (CIMBT) National Long-Term Rating has been affirmed at 'AA-(tha)' with a Stable Outlook.
-CIMB Securities (Thailand) Co., Ltd.'s (CIMBS) National Long-Term Rating has been affirmed at 'AA-(tha) with a Stable Outlook.
-Maybank Kim Eng Securities (Thailand) Public Company Limited's (MBKET) National Long-Term Rating has been affirmed at 'AA(tha)' with a Negative Outlook.
Fitch Ratings has also assigned to UOBT's planned issuance of senior unsecured debentures a National Long-Term Rating of 'AAA(tha)'. The debentures, which will be issued in tranches and have tenor of up to five years, will have a total issue size of up to THBCIMB Thai BankUnited Overseas Bankbn. The proceeds from the issue will be used for general corporate purposes and refinancing.
A full list of rating actions is included at the end of this commentary.
KEY RATING DRIVERS
IDRS, NATIONAL RATINGS AND SUPPORT RATINGS
The ratings on the four companies are driven by parental support, as Fitch believes that these are strategically important subsidiaries of their respective groups. UOBT is owned by United Overseas Bank Limited (UOB; AA-/Stable); CIMBT is owned by CIMB Bank Berhad (CIMB) and CIMBS is owned by CIMB Securities International Pte (CSI), which is ultimately owned by CIMB Group Holding Berhad; and MBKET is ultimately owned by Malayan Banking Berhad (Maybank; A-/Negative). The parental support is evident from the majority stakes or near-full ownership in the subsidiaries, full management control, name- and brand-sharing, strong levels of integration, and a history of operational and financial support from the parents to these subsidiaries.
The Negative Outlook at MBKET is consistent with the Outlook of its ultimate parent, Maybank.
VIABILITY RATINGS (VR)
UOBT's VR reflect the bank's reasonable asset quality and financial buffers, particularly in terms of capitalisation and reserve coverage ratio. The VR also incorporates its relatively small local franchise and lower profitability compared with local peers.
SENIOR DEBT
The senior debt ratings of UOBT, CIMBT and MBKET are consistent with their National Ratings as senior debts represent unsecured and unsubordinated obligations of the borrower.
SUBORDINATED UNSECURED DEBTS
CIMBT's subordinated unsecured debts (Lower Tier Fitch Ratings, Basel II compliant instruments) are rated one notch below the bank's National Long-Term Rating. The notching for these debt instruments reflects their subordination in the capital structure and is in line with Fitch's rating approach for such instruments.
RATING SENSITIVITIES
IDRS, NATIONAL RATINGS AND SUPPORT RATING
Any change in UOB's IDRs would be unlikely to affect UOBT's Long-Term Foreign-Currency IDR as it is currently capped by Thailand's Country Ceiling of 'A-'. The National Ratings and Support Ratings on UOBT are already at the top end of the scale and no upside is possible. A downgrade of Thailand's Country Ceiling would have a similar effect on UOBT's Long-Term Foreign-Currency IDR and Support Rating.
Material changes in the credit profile at CIMB are likely to have a similar effect on the National Ratings of CIMBT and CIMBS.
Any changes in the ratings at Maybank may lead to change on the National Ratings of MBKET.
An indication of material weakening of any of the parents' propensity to provide extraordinary support to their respective subsidiaries could result in a downgrade in their National Ratings. For example, this could be indicated by a significant reduction in ownership or level of commitment to provide financial support. However, Fitch does not view this as likely in the near term.
VIABILITY RATINGS
UOBT's VR could see upside if the bank shows improved profitability without any compromises on risk appetite, as well as evidence of a better liquidity and funding situation compared to similarly sized peers. Negative rating action on the VR could result if there is a severe and potentially long-lasting deterioration in key financial metrics such as performance, asset quality, and capitalisation.
SENIOR DEBT
An upgrade of the National Ratings could have similar effect on the senior debt rating of MBKET. The National Long-Term Rating on UOBT's senior unsecured debt and the National Short-Term Rating on CIMBT's senior unsecured debts are currently at the highest on Thailand's National Rating scale; hence, there is no potential upside. The downgrade in the National Ratings of UOBT, CIMBT and MBKET would lead to a downgrade on their senior debt ratings.
SUBORDINATED UNSECURED DEBTS
Any change in CIMBT's National Long-Term Rating would affect the rating of its subordinated debt to a similar extent.
The rating actions are as follows:
UOBT:
- Long-Term Foreign-Currency IDR affirmed at 'A-'; Outlook Stable
- Short-Term Foreign-Currency IDR affirmed at 'FFitch Ratings'
- Viability Rating affirmed at 'bb+'
- Support Rating affirmed at 'CIMB Thai Bank'
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'FCIMB Thai Bank+(tha)'
- National Long-Term Rating on senior unsecured debts (outstanding notes) affirmed at 'AAA(tha)'
- National Long-Term rating on senior unsecured debts (planned new issuance) assigned at 'AAA(tha)'
CIMBT:
- National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'FCIMB Thai Bank+(tha)'
- National Short-Term Ratings on short-term debt affirmed at 'FCIMB Thai Bank+(tha)'
- National Long-Term Rating on subordinated debt (Lower Tier Fitch Ratings) affirmed at 'A+(tha)'
CIMBS:
- National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'FCIMB Thai Bank+(tha)'
MBKET:
- National Long-Term Rating affirmed at 'AA(tha)'; Outlook Negative
- National Short-Term Rating affirmed at 'FCIMB Thai Bank+(tha)'
- National Long-Term Rating on senior unsecured debt affirmed at 'AA(tha)'
ข่าวUnited Overseas Bank+CIMB Thai Bankวันนี้
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