Bangkok--8 Sep--Moody's
Moody's Investors Service has upgraded the bank financial strength rating ("BFSR") of TMB Bank Public Company
Limited ("TMB") to "D-" from "E+". The bank's debt and deposit ratings are unaffected. The outlook for all ratings is stable. The upgrade concludes the review of TMB's BFSR for possible upgrade announced on March 14, 2006.
"The upgrade reflects the bank's successful issuance of its US$ hybrid securities in May 2006 and completion of its rights issue in August 2006, which together raised approximately US$460 million," says Leo Wah, a Moody's Assistant Vice President/Analyst.
The rating agency notes that the fund-raising has boosted TMB's regulatory capital to approximately 12% --- a level closer to those of the top banks in Thailand.
More importantly, the bank's economic solvency (adjusted for possible additional loan losses and the basket treatment of its hybrid issue) will now increase to a moderate level of about 6%, supporting its plan to reduce its non-performing loan ratio, raise loan-loss reserve coverage and expand its consumer lending exposures.
All these areas are still far from satisfactory and TMB must deliver significant improvements over a certain period to time to warrant a BFSR comparable to those of the top Thai banks.
"As long as TMB's financials remain weak, despite improvements, Moody's will hold it to a high level of economic solvency relative to the banks with BFSR of "D-" in other countries," says Wah.
"The full subscription of the rights issue by TMB's major shareholders further indicates that they would offer continued strong support, if needed," notes Wah.
"Separately, Moody's has requested market feedback on its proposals to adopt a Joint Default Analysis approach to assess support factors in ratings and a revised rating methodology for assigning BFSR," says Wah, adding "If adopted, this could benefit the deposit and debt ratings assigned to TMB."
Headquartered in Bangkok, Thailand, TMB had total assets of about Bt 770 billion (US$ 20 billion) as at June 30, 2006. The Thai military's aggregate stake in TMB has declined significantly since the Asian financial crisis of 1997 and currently stands at about 4.8%. 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
VP - Senior Credit Officer
Financial Institutions Group
Moody's Singapore Pte Ltd.
JOURNALISTS: (852) 2916-1150
SUBSCRIBERS: (65) 6398-8308