Fitch Affirms 8 Thai Subsidiaries of Foreign Financial Institutions
Fitch Ratings has affirmed the National Long-Term Ratings on eight Thai subsidiaries of foreign financial institutions.
The following have been affirmed at Fitch RatingsMaybank Kim Eng6;AAA(tha)Fitch RatingsMaybank Kim Eng7;:
- United Overseas Bank (Thai) Public Company Limited (UOBT),
- Bank of China (Thai) Public Company Limited (BOCT),
- Industrial and Commercial Bank of China (Thai) Public Company Limited (ICBCT), and
- ICBC (Thai) Leasing Company Limited (ICBCTL).
Maybank Kim Eng Securities (Thailand) Public Company Limited (MBKET) has been affirmed at Fitch RatingsMaybank Kim Eng6;AA(tha)Fitch RatingsMaybank Kim Eng7;. The following have been affirmed at Fitch RatingsMaybank Kim Eng6;AA-(tha)Fitch RatingsMaybank Kim Eng7;:
- CIMB Thai Bank Public Company Limited (CIMBT),
- CIMB Securities (Thailand) Company Limited (CIMBS), and
- Capital Nomura Securities Public Company Limited (CNS).
Fitch has also affirmed UOBT's and CIMBT's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A-' and 'BBB'.
Fitch has simultaneously withdrawn CIMBTFitch RatingsMaybank Kim Eng7;s Long-Term and Short-Term IDRs, Support Rating, and Viability Rating, as these are no longer considered relevant to the agency's international coverage.
A full list of rating actions is included at the end of this commentary.
KEY RATING DRIVERS - National Ratings, IDRs, Support Ratings and Senior Debt
The National Ratings of UOBT, BOCT, ICBCT, MBKET, CIMBT, CIMBS, and CNS, as well as the IDRs and Support Ratings of UOBT and CIMBT, are driven by FitchFitch RatingsMaybank Kim Eng7;s view that these are strategically important subsidiaries of their respective groups - namely United Overseas Bank Limited (UOB; AA-/Stable), Bank of China (BOC; A/Stable) Industrial and Commercial Bank of China (ICBC; A/Stable), Malayan Banking Berhad (Maybank; A-/Negative), CIMB Bank Berhad (CIMB), and Nomura Holdings Incorporated (NH; A-/Stable/VR of bbb). This is due to high levels of group shareholding and control, name- and brand-sharing, management integration, and histories of support. Hence Fitch believes that there would be a high probability of extraordinary support for the subsidiaries if required.
The National Ratings of ICBCTL are equalised with that of ICBCT to reflect FitchFitch RatingsMaybank Kim Eng7;s view that it is a core subsidiary of the bank. ICBCTL is a key part of the bankFitch RatingsMaybank Kim Eng7;s strategy, accounting for around Bank of ChinaUnited Overseas Bank% of consolidated loans and 4United Overseas Bank% of consolidated revenues in Fitch RatingsUnited Overseas BankMaybank Kim Eng4.
The senior debt ratings at CIMBT, ICBCTL, MBKET, and UOBT are consistent with the National Ratings at these entities, as they represent unsubordinated and unsecured obligations of the borrowers.
The following have been affirmed at Fitch RatingsMaybank Kim Eng6;AAA(tha)Fitch RatingsMaybank Kim Eng7;:
- United Overseas Bank (Thai) Public Company Limited (UOBT),
- Bank of China (Thai) Public Company Limited (BOCT),
- Industrial and Commercial Bank of China (Thai) Public Company Limited (ICBCT), and
- ICBC (Thai) Leasing Company Limited (ICBCTL).
Maybank Kim Eng Securities (Thailand) Public Company Limited (MBKET) has been affirmed at Fitch RatingsMaybank Kim Eng6;AA(tha)Fitch RatingsMaybank Kim Eng7;. The following have been affirmed at Fitch RatingsMaybank Kim Eng6;AA-(tha)Fitch RatingsMaybank Kim Eng7;:
- CIMB Thai Bank Public Company Limited (CIMBT),
- CIMB Securities (Thailand) Company Limited (CIMBS), and
- Capital Nomura Securities Public Company Limited (CNS).
Fitch has also affirmed UOBT's and CIMBT's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'A-' and 'BBB'.
Fitch has simultaneously withdrawn CIMBTFitch RatingsMaybank Kim Eng7;s Long-Term and Short-Term IDRs, Support Rating, and Viability Rating, as these are no longer considered relevant to the agency's international coverage.
A full list of rating actions is included at the end of this commentary.
KEY RATING DRIVERS - National Ratings, IDRs, Support Ratings and Senior Debt
The National Ratings of UOBT, BOCT, ICBCT, MBKET, CIMBT, CIMBS, and CNS, as well as the IDRs and Support Ratings of UOBT and CIMBT, are driven by FitchFitch RatingsMaybank Kim Eng7;s view that these are strategically important subsidiaries of their respective groups - namely United Overseas Bank Limited (UOB; AA-/Stable), Bank of China (BOC; A/Stable) Industrial and Commercial Bank of China (ICBC; A/Stable), Malayan Banking Berhad (Maybank; A-/Negative), CIMB Bank Berhad (CIMB), and Nomura Holdings Incorporated (NH; A-/Stable/VR of bbb). This is due to high levels of group shareholding and control, name- and brand-sharing, management integration, and histories of support. Hence Fitch believes that there would be a high probability of extraordinary support for the subsidiaries if required.
The National Ratings of ICBCTL are equalised with that of ICBCT to reflect FitchFitch RatingsMaybank Kim Eng7;s view that it is a core subsidiary of the bank. ICBCTL is a key part of the bankFitch RatingsMaybank Kim Eng7;s strategy, accounting for around Bank of ChinaUnited Overseas Bank% of consolidated loans and 4United Overseas Bank% of consolidated revenues in Fitch RatingsUnited Overseas BankMaybank Kim Eng4.
The senior debt ratings at CIMBT, ICBCTL, MBKET, and UOBT are consistent with the National Ratings at these entities, as they represent unsubordinated and unsecured obligations of the borrowers.
The Negative Outlook at MBKET is consistent with the Outlook at its ultimate parent Maybank.
RATING SENSITIVITIES - National Ratings, IDRs, Support Ratings and Senior Debt
The National Ratings at UOBT, BOCT, ICBCT, and ICBCTL are already at the top end of the scale and no upside is possible. Otherwise, the ratings on these subsidiaries and on ICBCTL, MBKET, and CNS would be impacted to a similar extent by rating actions at their parent entities.
The ratings on CIMBT and CIMBS could be impacted by material changes in the credit of the main group entity CIMB. A significant and sustained improvement in CIMB’s profile may result in upgrades of the subsidiaries’ ratings, while a major deterioration may result in downgrades.
Any changes in the perceived propensity of the groups to support their Thai subsidiaries could also lead to rating shifts. For example, a large divestment of any shareholdings, or a clear lack of financial commitment may lead to downgrades.
KEY RATING DRIVERS - Viability Ratings
The VRs at UOBT and CIMBT are driven by their relatively smaller size and local franchise. The ratings also take into account UOBT’s strong capitalisation and weaker financial performance compared to similarly rated banks. CIMBT’s VR reflects an acceptable financial profile at the current rating; although some of the key financial measures, particularly in earnings and capitalisation, are moderately weaker than similarly rated peers.
RATING SENSITIVITIES - Viability Ratings
A material deterioration in key financial metrics, particularly in profitability, asset quality and capital, could negatively affect the VRs on UOBT and CIMBT. Maintenance of satisfactory profitability and asset quality through a weak operating environment is likely to strengthen the banks’ positions at the current VRs. A sustain improvement in their overall financial profiles could lead to upgrades, although this appears unlikely in the short term.
KEY RATING DRIVERS AND SENSITIVITIES - Subordinated Debt
CIMBT's Lower Tier 2 debts are rated one notch below CIMBT's National Long-term Rating, reflecting their subordination in the capital structure and in line with Fitch’s approach of rating such instrument. Any change in CIMBT’s National Long-Term Rating would similarly affect the rating of its subordinated debts.
KEY RATING DRIVERS AND SENSITIVITIES - Guaranteed Bonds
ICBCTL’s bonds guaranteed by ICBCT are rated at the same level as ICBCT’s National Long-Term Rating based entirely on an unconditional and irrevocable guarantee provided by ICBCT. The ratings of the guaranteed bond would be affected by any negative ratings action on ICBCT. For example, this could be caused by a change in ICBC’s ability to support ICBCT or by a shift in ICBC’s propensity to support ICBCT.
The list of ratings actions is as follows:
UOBT:
- Long-Term Foreign Currency IDR affirmed at 'A-'; Outlook Stable
- Short-Term Foreign Currency IDR affirmed at 'F2'
- Viability Rating affirmed at 'bb+'
- Support Rating affirmed at '1'
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
- National senior unsecured debt affirmed at ‘AAA(tha)’
BOCT:
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
CIMBT:
- Long-Term Foreign Currency IDR affirmed at 'BBB'; Outlook Stable, and withdrawn
- Short-Term Foreign Currency IDR affirmed at 'F3', and withdrawn
- Viability Rating affirmed at 'bb-', and withdrawn
- Support Rating affirmed at '2', and withdrawn
- National Long-term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-term Rating affirmed at 'F1+(tha)'
- National Short-term debts affirmed at 'F1+(tha)'
- Lower Tier 2 debt affirmed at 'A+(tha)'
CIMBS:
- National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
ICBCT:
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
ICBCTL:
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
- National Long-Term guaranteed bonds by ICBCT affirmed at 'AAA(tha)' ; Outlook Stable
- National Long-Term senior unsecured bonds affirmed at 'AAA(tha)'
- National Short-Term unsecured unsubordinated debenture programme affirmed at 'F1+(tha)'
MBKET:
- National Long-Term Rating affirmed at 'AA(tha)'; Outlook Negative
- National Short-Term Rating affirmed at 'F1+(tha)'
- National senior unsecured debt affirmed at ‘AA(tha)’
CNS:
- National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
RATING SENSITIVITIES - National Ratings, IDRs, Support Ratings and Senior Debt
The National Ratings at UOBT, BOCT, ICBCT, and ICBCTL are already at the top end of the scale and no upside is possible. Otherwise, the ratings on these subsidiaries and on ICBCTL, MBKET, and CNS would be impacted to a similar extent by rating actions at their parent entities.
The ratings on CIMBT and CIMBS could be impacted by material changes in the credit of the main group entity CIMB. A significant and sustained improvement in CIMB’s profile may result in upgrades of the subsidiaries’ ratings, while a major deterioration may result in downgrades.
Any changes in the perceived propensity of the groups to support their Thai subsidiaries could also lead to rating shifts. For example, a large divestment of any shareholdings, or a clear lack of financial commitment may lead to downgrades.
KEY RATING DRIVERS - Viability Ratings
The VRs at UOBT and CIMBT are driven by their relatively smaller size and local franchise. The ratings also take into account UOBT’s strong capitalisation and weaker financial performance compared to similarly rated banks. CIMBT’s VR reflects an acceptable financial profile at the current rating; although some of the key financial measures, particularly in earnings and capitalisation, are moderately weaker than similarly rated peers.
RATING SENSITIVITIES - Viability Ratings
A material deterioration in key financial metrics, particularly in profitability, asset quality and capital, could negatively affect the VRs on UOBT and CIMBT. Maintenance of satisfactory profitability and asset quality through a weak operating environment is likely to strengthen the banks’ positions at the current VRs. A sustain improvement in their overall financial profiles could lead to upgrades, although this appears unlikely in the short term.
KEY RATING DRIVERS AND SENSITIVITIES - Subordinated Debt
CIMBT's Lower Tier 2 debts are rated one notch below CIMBT's National Long-term Rating, reflecting their subordination in the capital structure and in line with Fitch’s approach of rating such instrument. Any change in CIMBT’s National Long-Term Rating would similarly affect the rating of its subordinated debts.
KEY RATING DRIVERS AND SENSITIVITIES - Guaranteed Bonds
ICBCTL’s bonds guaranteed by ICBCT are rated at the same level as ICBCT’s National Long-Term Rating based entirely on an unconditional and irrevocable guarantee provided by ICBCT. The ratings of the guaranteed bond would be affected by any negative ratings action on ICBCT. For example, this could be caused by a change in ICBC’s ability to support ICBCT or by a shift in ICBC’s propensity to support ICBCT.
The list of ratings actions is as follows:
UOBT:
- Long-Term Foreign Currency IDR affirmed at 'A-'; Outlook Stable
- Short-Term Foreign Currency IDR affirmed at 'F2'
- Viability Rating affirmed at 'bb+'
- Support Rating affirmed at '1'
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
- National senior unsecured debt affirmed at ‘AAA(tha)’
BOCT:
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
CIMBT:
- Long-Term Foreign Currency IDR affirmed at 'BBB'; Outlook Stable, and withdrawn
- Short-Term Foreign Currency IDR affirmed at 'F3', and withdrawn
- Viability Rating affirmed at 'bb-', and withdrawn
- Support Rating affirmed at '2', and withdrawn
- National Long-term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-term Rating affirmed at 'F1+(tha)'
- National Short-term debts affirmed at 'F1+(tha)'
- Lower Tier 2 debt affirmed at 'A+(tha)'
CIMBS:
- National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
ICBCT:
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
ICBCTL:
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
- National Long-Term guaranteed bonds by ICBCT affirmed at 'AAA(tha)' ; Outlook Stable
- National Long-Term senior unsecured bonds affirmed at 'AAA(tha)'
- National Short-Term unsecured unsubordinated debenture programme affirmed at 'F1+(tha)'
MBKET:
- National Long-Term Rating affirmed at 'AA(tha)'; Outlook Negative
- National Short-Term Rating affirmed at 'F1+(tha)'
- National senior unsecured debt affirmed at ‘AA(tha)’
CNS:
- National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
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