Bangkok--15 Mar--Moody's
Action Follows Announced Capital Raising Plans
Moody's Investors Service has placed the bank financial strength rating ("BFSR") of TMB Bank Public Company Limited ("TMB") on review for possible upgrade. Its debt and deposit ratings are unaffected by this action, and their stable outlook is maintained.
"The review reflects TMB's announced plan to increase its capital base," says lead analyst Leo Wah, adding, "It proposes to raise approximately US$500 million through two transactions by September 2006: US$300 million through a rights issue and US$200 million through hybrid securities, the terms of which have yet to be finalised."
The rating agency notes that the capital raising transactions would boost TMB's regulatory capital to a level comparable to other large banks in Thailand. More importantly, the bank's economic capital (adjusted for possible additional loan losses) would increase to a moderate level, supporting the recovery in loan demand in Thailand.
"Moody's review will focus on the success of TMB's proposed rights issue and hybrid securities offer," says Wah, adding, "Given that the possible hike in economic capital will mainly be contributed by the rights issue, a possible upgrade of its BFSR would hinge primarily on a successful rights issue. With TMB's financials still being weak despite the gradual
improvement, Moody's will hold TMB to a higher economic capital level relative to the banks with BFSR of D- in other countries, until its fundamentals show substantial progression.
Moody's also says that it is maintaining its stable outlook on TMB's debt and deposit ratings because the potential for support from shareholders was already adequately reflected in the ratings. This level of support is not expected to change in the foreseeable future.
Headquartered in Bangkok, Thailand, TMB had total assets of about Bt 717 billion (US$ 18 billion) as at December 31, 2005. The Thai military's aggregate stake in TMB has declined significantly since the Asian financial crisis of 1997 and currently stands at about 5%. The Thai Ministry of Finance is the largest shareholder with 31.2%. Singapore's DBS Bank holds 16.1%.
Hong Kong
Leo Wah, CFA
Asst Vice President - Analyst
Financial Institutions Group
Moody's Asia Pacific Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (852) 2916-1121
Singapore
Beatrice Woo
Vice President - Senior Analyst
Financial Institutions Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308