Bangkok--28 Sep--Fitch Ratings Fitch Ratings has today affirmed BankThai Public Company Limited's (BT) Support rating at '4'. While the central bank's Financial Institutions Development Fund (FIDF) still holds a 33% stake in BT, this state ownership is likely to be further reduced in the medium term. The agency notes that any further dilution of government ownership could affect BT's Support rating. The bank raised THB3 billion in capital in H107 from TPG Newbridge-related entities - which now hold a combined 33% stake in BT. The rating reflects Fitch's view of the limited probability of state support for BT over the long term given the bank's small size and, hence limited importance to the banking system. In the short term, Newbridge and the FIDF may provide support to enhance the bank's viability on a going-concern basis. The bank's financial strength is still constrained by its weak franchise and capital. In H206, the settlement of claims between the bank and the central bank's FIDF relating to the covered asset pool caused additional losses of THB3.9bn, which together with higher provisioning of THB2bn resulted in a large net loss for 2006 equivalent to nearly half of its equity base. BT also reported a further loss in H107 of THB0.5bn due to large provisioning from a single corporate default. In July 2007, BT disclosed that it had exposure of THB1.76bn to subprime residential mortgage assets and total exposure to collateralised debt obligations (CDOs) of about THB14.5bn. So far, BT has made only THB0.3bn in provisions against the subprime exposure. Moreover, BT has reported THB11.4bn of the CDOs held to maturity at an acquisition cost, and THB3.1bn at fair value, so additional mark to market losses are possible. In addition, the bank has disclosed a very large exposure of THB38bn to structured notes, of which the risks are unclear at this point. BT reports that these represent notes issued by foreign financial institutions and banks whose ratings were 'A' or higher, at end of August 2007. More generally, BT's impaired loans have risen significantly over the past two years to 11%, with its total capital of 9% appearing modest given its vulnerabilities. Fitch understands that the bank and its shareholders are examining its capital position. Contacts: Vincent Milton, Bangkok, +662 655 4759; David Marshall, Hong Kong +852 2263 9963. Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6336 0095.