Bangkok--13 Jul--Fitch Ratings
Fitch Ratings (Thailand) has maintained the Rating Watch Negative on CGS-CIMB Securities (Thailand) Co., Ltd.'s (CGS-CIMB TH) National Long-Term Rating of 'AA-(tha)' and National Short-Term Rating at 'F1+(tha)'.
Fitch placed CGS-CIMB TH's ratings on Rating Watch Negative on 14 February 2018 following CIMB group's announcement that it agreed to sell a 50% stake in CGS-CIMB TH's parent - CGS-CIMB Securities International Pte. Ltd. (CGS-CSI) - to China Galaxy International Financial Holdings Limited (CGI). The ratings remain on Rating Watch Negative pending Fitch's review of the institutional support available to CGS-CIMB TH after the ownership change at the parent level.
KEY RATING DRIVERS
CGS-CIMB TH's board and branding has changed to reflect the change in control at its parent, CGS-CSI, since Fitch placed the company on Rating Watch Negative in February 2018. Fitch also believes there are ongoing changes in the company's strategic direction and risk management framework.
The Rating Watch Negative reflects the possibility that external support to CGS-CIMB TH may not be as strong as the support previously received from CIMB group, which has clear plans to further reduce its stake in the securities businesses. Fitch believes the ability and propensity of support from the new shareholder, CGI, remains unclear. See Fitch Downgrades CIMBS to 'AA-(tha)', on RWN; Affirms 3 Thai Subsidiaries of Foreign Banks, dated 14 February 2018, for details.
Fitch continues to assess the credit profile of CGS-CSI, which incorporates an assessment of the linkage between CGS-CSI and its shareholders, and that of CGI.
RATING SENSITIVITIES
Fitch will resolve the Rating Watch Negative on CGS-CIMB TH's ratings once Fitch completes its assessment of CGS-CSI's profile and propensity to support CGS-CIMB TH. Fitch may downgrade the ratings if it believes that joint support from CIMB group and China Galaxy group to CGS-CSI, and hence CGS-CIMB TH, is lower than the rating currently indicates.