Bangkok--9 Dec--Fitch Ratings
Fitch Ratings has affirmed the ratings for the following policy banks in Thailand: Bank for Agriculture and Agricultural Cooperatives (BAAC), Export-Import Bank of Thailand (EXIM), Government Housing Bank (GH Bank), Government Savings Bank (GSB), Islamic Bank of Thailand (IBANK) and SME Development Bank of Thailand (SME Bank). A full list of rating actions is below.
KEY RATING DRIVERS
All ratings are based on our view that there is a high probability of support from the Thai government for these policy banks. The government, via the Ministry of Finance, has full ownership of EXIM, GSB and GH Bank and near-full ownership of BAAC and SME Bank.
EXIM's Long-Term Issuer Default Ratings (IDRs) are at the same level as the sovereign (BBB+/Stable). The National Ratings of EXIM, SME Bank and GH Bank are at the highest level based on their strong linkages to the government. Apart from the state ownership, their ratings are also underpinned by their legal status as specialised financial institutions, their specific policy roles that fulfill government objectives, and their strategic importance to the state.
GSB's and BAAC's Support Ratings are based on their important roles in implementing government policy objectives. GSB benefits from an explicit state guarantee on its liabilities, while BAAC has a deficiency guarantee from the government.
IBANK's Long-Term IDRs and Long-Term National Rating are two notches below the sovereign's. This is due to the absence of explicit support from the government in its establishment act, a cap on the Ministry of Finance's shareholding at 49%, and its relatively weaker policy role compared with other state policy banks.
The Stable Outlooks of EXIM, IBANK, SME Bank and GH Bank reflect Fitch's expectation that the state support policy towards these specialised financial institutions remain unchanged and will continue.
RATING SENSITIVITIES
The ratings would generally move in tandem with changes in the sovereign rating, with the exception of the National Ratings. A change in Thailand IDRs would affect EXIM's and IBANK's Long-Term IDRs and Support Rating Floor. The National Ratings of the banks, however, would unlikely be affected by the change in Thailand's IDR because the sovereign would still have the lowest default risk within the country.
The banks' Support Ratings are potentially sensitive to any change in the ability of the sovereign to provide timely support to the bank. A change in Thailand's Long-Term Foreign-Currency IDR to the 'A' or 'BB' category would imply a change in ability to provide support, and thus affect the Support Ratings of the policy banks.
Any perceived change in the sovereign's propensity or capacity to provide support would also affect the ratings. In this regard, a legal amendment or a change in legal and ownership status that results in the weakening of potential state support could lead to a downgrade of the banks' Support Ratings and National Long-Term Rating. However, Fitch views this as unlikely given the banks' key policy roles.
The rating actions are as follows:
BAAC:
- Support Rating affirmed at '2'
EXIM:
- Long-Term IDR affirmed at 'BBB+'; Outlook Stable
- Short-Term IDR affirmed at 'F2'
- Support Rating affirmed at '2'
- Support Rating Floor affirmed at 'BBB+'
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable
- National Short-Term Rating affirmed at 'F1+(tha)'
GH Bank:
- Support Rating affirmed at '2'
- National Long-Term Rating affirmed at 'AAA(tha)'; Stable Outlook
- National Short-Term Rating affirmed at 'F1+(tha)'
GSB:
- Support Rating affirmed at '2'
IBANK:
- Long-Term IDR affirmed at 'BBB-'; Stable Outlook
- Short-Term IDR affirmed at 'F3'
- Support Rating affirmed at '2'
- Support Rating Floor affirmed at 'BBB-'
- National Long-Term Rating affirmed at 'AA(tha)'; Stable Outlook
- National Short-Term Rating affirmed at 'F1+(tha)'
SME Bank:
- National Long-Term Rating affirmed at 'AAA(tha)'; Stable Outlook
- National Short-Term Rating affirmed at 'F1+(tha)'