Bangkok--25 Sep--Fitch Ratings Fitch Ratings (Thailand) has today upgraded Thanachart Bank's (TBANK) National Long-term rating to 'A(tha)' from 'A-(tha)' (A minus (tha)), Short-term rating to 'F1(tha)' from 'F2(tha)', as well as upgraded the Individual rating to 'C/D' from 'D' and Support rating to '4' from '5'. The agency has also affirmed Thanachart Capital's (TCAP) National Long-term rating at 'A-(tha)' (A minus (tha)), Short-term rating 'F2(tha)' and the Support '5' rating. TBANK and TCAP are removed from Rating Watch Evolving. The Outlook on both entities is Stable. The rating actions follow the completion of a 25% acquisition of TCAP group's main banking subsidiary, TBANK, by Canada's Bank of Nova Scotia (Scotia, rated 'AA-' (AA minus)/'F1+' on an international scale), including its intention to increase its stake to up to 49%, subject to regulatory approvals. Future rating actions will be subject to further assessment of the level of operational and financial support from Scotia, as well as the impact of the acquisition on TBANK's banking franchise, earnings, overall business strategy and risk management, and the extent to which this addresses Fitch's concerns on the group's risk profile, profitability and asset quality. TBANK should benefit from Scotia's expertise in global transaction services, commercial and retail banking and wealth management, including technology and operations. Scotia completed the acquisition in late July at a cost of THB7.1 billion and ceased its Bangkok branch's operation by transferring the assets and liabilities of the branch to TBANK, in order to comply with the Bank of Thailand's (BOT) "One Presence" policy. Scotia currently has two representatives on TBANK's board of directors, comprising of ten directors in total. Scotia also plans to second several staff in the areas of risk management, operations and lending. Scotia is the most internationally diverse of Canada's banks, with substantial Caribbean and Latin American operations, as well as a significant Asian presence. It reported a net profit of CAD3.6bn in 2006, up from CAD3.2bn the previous year, thanks to strong growth in its international banking segment. Its capital ratios remain well above the regulatory minimum and compared well globally, with Tier 1 capital ratio at 10.2% at end-2006. The new capital raising of THB4.5bn from Scotia has strengthened TBANK's Tier 1 capital by a third to about 11% from 8.5%. The capital increase has addressed some of Fitch's concerns about the group's vulnerabilities to a weakening operating environment. First-half results for 2007 indicate the bank's performance has so far held up despite the slower economic growth, with a net profit of THB0.3 bn. Impaired loans appear to have increased only slightly to 2%, although there was a significant rise in provisions and asset quality pressures persist due in part to aggressive growth in recent years. The bank's margins are also still lower than its peer group. Contacts: Vincent Milton, Bangkok +662 655 4759; David Marshall, Hong Kong +852 2263 9963. Note to Editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(tha)' for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6336 0095.