Bangkok--24 Dec--Fitch Ratings
Fitch Ratings has revised TMB Bank Public Company Limited's (TMB) Support Rating Floor (SRF) to 'BBB-' from 'BB+', upgraded its Support Rating to '2' from '3' and removed them from Rating Watch Positive (RWP). The rating actions follow the completion of a merger between TMB and Thanachart Bank Public Company Limited (TBANK) on 3 December 2019 as scheduled.
The SRF and SR were placed on RWP on 3 September 2019 after TMB confirmed the merger with TBANK and set a completion timeline. TMB's other ratings are not affected by this rating action.
The rating actions are consistent with Fitch's earlier expectation that TMB's systemic importance would increase significantly after the merger as it will have much larger domestic market shares in deposits and assets, which would be more comparable with those of the five domestic systemically important banks (DSIBs).
KEY RATING DRIVERS
The acquisition of TBANK by TMB has created the sixth-largest bank in Thailand and Fitch believes that there is now a high probability of the government providing TMB with timely extraordinary support, if needed. Fitch expects the merger to double TMB's deposits and assets to around THB1.4 trillion and THB1.9 trillion, respectively, by end-2019 (estimate based on end-September 2019 data). The bank's market shares in deposits and assets are also expected to jump to about 10% and 9%, respectively, compared with the market shares of the DSIBs, which range from 11% to 17%.
TMB expects the integration process and entire business transfer of TBANK to be completed in 2021.
RATING SENSITIVITIES
A change in government's ability to provide support to TMB could affect the SRF. For example, an upgrade of Thailand's Long-Term Foreign Currency IDR of 'BBB+' with Positive Outlook, could lead to TMB's SRF being further revised upwards to 'BBB'. Conversely, a downgrade of the Thai sovereign rating (which appears unlikely in the near term given the current rating status) could lead to TMB's SRF being revised down to the 'BB' category. The SR is unlikely to change unless the SRF is revised into a different category.
TMB's SRF and SR could also be negatively affected if Fitch believes that there is a decline in government's propensity to provide support to TMB. This could occur if there are any signs of a significant reduction in the bank's systemic importance or should resolution legislation be introduced that renders the prospect of the government providing timely extraordinary support as less likely than our current expectations.
ESG CONSIDERATIONS
Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of 3 - ESG issues are credit neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity.
For more information on our ESG Relevance Scores, visit www.fitchratings.com/esg.
Additional information is available on www.fitchratings.com