Bangkok--Jan 7--Fitch Ratings (Thailand)
Fitch Ratings, the international rating agency, has today affirmed Siam Commercial Bank’s (“SCB”) ratings at Long-term ‘BBB’, Short-term ‘F3’, Individual ‘C/D’, Support ‘2’ and ‘BBB-’ (BBB minus) for its subordinated debt, following the bank’s announcement that it is making a tender offer to acquire the remaining 72% stake in Siam Panich Leasing (“SPL”) from SPL’s minority shareholders. The Outlook on the ratings is Stable.
In December 2004, SCB exercised 15.5 million warrants to buy SPL’s shares, increasing its shareholding in SPL to 28% from 22.5%. When SCB’s shareholdings in SPL exceeded 25%, it was required by the Securities and Exchange Commission (“SEC”) to make a tender offer for all of SPL’s shares. The offer price of THB33.7 is the average of SPL’s share price during the last five working days before the day SCB’s shareholdings in SPL exceeded the 25% level. The tender offer period is from 30 December 2004 until 4 February 2005.
Depending on the take-up rate, the maximum value of the tender offer would total THB5.2 billion. This should not have a significant impact on SCB’s liquidity and capital positions considering such maximum value is only 4% of SCB’s liquid assets or 8% of the bank’s Tier-1 capital at end-September 2004.
SCB has no plan to make significant changes to SPL’s business plans or policies within a year from the end of the tender offer period. Nonetheless, the number of SCB’s representatives on SPL’s board of directors and management is likely to increase if the bank gains a controlling stake. Over the past four years, low interest rates, increasing consumer confidence and easier access to consumer credit have underpinned SPL’s strong growth. Although growth may be affected by rising interest rates in the medium term, Thailand’s relatively low consumer credit penetration, low vehicle ownership and a growing middle class should help support continued growth. In 2003, the contribution from SPL made up 1.4% of SCB’s net income. A majority stake in SPL would help strengthen SCB’s earnings in the medium term, boost SCB’s retail banking franchise and give the bank greater oversight of SPL’s credit policies and operations.
Contact: Chaiyapat Paitoon, Vincent Milton, Bangkok +662 655 4762/4759; David Marshall, Hong Kong +852 2263 9963.
Note to Editors: Fitch’s Support and Individual Ratings for Banks
Fitch’s Individual ratings assess how a bank would be viewed if it were entirely independent and could not rely on external support. Its Support ratings deal with the question of whether a bank would receive support from its owners or from the state if it were to get into difficulty. These ratings are not debt ratings but rather, respectively, an assessment of the intrinsic strength of a bank and of any level of outside support that may, or may not, be available to it. End.