Bangkok--3 Sep--Fitch Ratings
Fitch Ratings (Thailand) has affirmed the National Long-Term Ratings of Industrial and Commercial Bank of China (Thai) Public Company Limited (ICBCT) and ICBC (Thai) Leasing Company Limited (ICBCTL) at 'AAA(tha)' with Stable Outlooks. It also affirmed ICBCT's and ICBCTL's National Short-Term Ratings at 'F1+(tha)'.
A full list of rating actions is at the end of this commentary.
KEY RATING DRIVERS
Fitch has used its institutional-support framework to rate ICBCT. The agency believes the bank would benefit from extraordinary support from its ultimate parent, the Industrial and Commercial Bank of China Limited (ICBC, A/Stable/bb+). Fitch sees the Thai subsidiary as important strategically to the group. The parent entity has a 98% stake in the ICBCT, exercises management control, and integrates the subsidiary closely with the ICBC group with full brand-sharing.
The agency sees ICBCTL as a core subsidiary of its parent bank, ICBCT, and equalises the two entities' National Ratings. ICBCTL operates ICBCT's key hire-purchase business, which represents about a third of its net interest and fee income. Fitch assesses that ICBCTL is an integral part of ICBCT's business and franchise.
ICBCTL's senior debt ratings are equalised with its National Ratings, consistent with Fitch's approach for rating senior debt instruments.
SUBORDINATED DEBT
The Basel III Tier 2 notes of ICBCT are rated one notch down from the bank's National Long-Term Rating to reflect that the instruments do not incorporate going-concern loss-absorption features or a mandatory full write-down feature at non-viability.
RATING SENSITIVITIES
The National Ratings of ICBCT and ICBCTL are already at the top-end of the scale, meaning there is no rating upside. Fitch may downgrade the ratings of ICBCT if ICBC's ability to support its subsidiary were to decline as reflected by a downgrade in its IDR.
The ratings of ICBCT are also sensitive to any material changes in ICBC's propensity to provide it with extraordinary support. Negative rating action may occur if ICBC reduces significantly its ownership or financial commitments. However, Fitch sees limited likelihood in the near-term of ICBC lowering its propensity to support ICBCT.
The ratings of ICBCTL would be similarly affected by any changes in the ratings of ICBCT. Furthermore, ICBCTL's ratings could also be downgraded if Fitch no longer believed that ICBCTL is a core subsidiary of ICBCT. For example, this could arise from a material reduction in ICBCT's ownership or financial commitments. A diminished importance of ICBCTL to ICBCT through sharply lower contributions to ICBCT's asset portfolio, revenue and profit could also imply reduce propensity to support.
SUBORDINATED DEBT
The subordinated debt ratings of ICBCT are broadly sensitive to the same factors affecting their National Long-Term Ratings.
Additional information is available on www.fitchratings.com