Bangkok--17 Apr--Fitch Ratings
Fitch Ratings has today downgraded the international ratings of four Thai banks and revised the Outlook to Stable from Negative. The action follows the downgrade of the Kingdom of Thailand's Long-term foreign and local currency Issuer Default Ratings (IDR) to 'BBB' from 'BBB+' and to 'A-' (A minus) from 'A', respectively, and the revision of the Outlook to Stable from Negative. The agency has also downgraded Thailand's Short-term foreign currency IDR to 'F3' from 'F2' and the Country Ceiling to 'BBB+' from 'A-' (A minus).
The downgrades of Krung Thai Bank Public Company Limited (KTB) and Export Import Bank of Thailand (EXIM) reflect the weakening in the government's ability to provide support, in case of need. The Bank of Thailand's (BOT) Financial Institution Development Fund (FIDF) holds a 55% stake in KTB, while EXIM is fully owned by the Ministry of Finance.
The downgrades of Standard Chartered Bank (Thai) Public Company Limited (SCBT) and United Overseas Bank (Thai) Public Company Limited (UOBT) follow the downgrade of Thailand's Country Ceiling. The Country Ceiling of Thailand captures transfer and convertibility risks and limits the extent to which support from the foreign parent companies of these banks can be factored into their Long-term foreign currency Issuer Default Ratings (IDRs).
The ratings of the five major private banks - Bangkok Bank Public Company Limited, Siam Commercial Bank Public Company Limited, Kasikornbank Public Company Limited, Bank of Ayudhya Public Company Limited and TMB Bank Public Company Limited - were unaffected by the sovereign downgrade. The ratings of these five private banks are driven more by standalone financial strength which remains relatively strong although the severe economic contraction (Fitch GDP forecast -3.8% in 2009) could affect their financial performance over the next two years, which is reflected in their Negative Outlooks. Government ownership and control of the private banks is limited and exposure to Thai government securities and loans is moderate at less than 20% of assets.
As the National ratings are a relative measure of creditworthiness between the sovereign and other issuers within Thailand, the National ratings are, at this stage, not affected. Hence, all the National ratings on the four banks listed below were affirmed with Stable Outlooks. A complete listing follows below:
Krung Thai Bank:
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Stable
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
Individual Rating: affirmed at 'C/D'
Support Rating: affirmed at '2'
Foreign currency subordinated debt: downgraded to 'BBB-' (BBB minus) from 'BBB'
Foreign currency Tier-1 hybrid: downgraded to 'BB' from 'BB+'
Support Rating Floor: downgraded to 'BBB' from 'BBB+'
National Long-term Rating: affirmed at 'AA+(tha)'; Outlook Stable
National Short-term Rating: affirmed at 'F1+(tha)'
National subordinated debt: affirmed at 'AA(tha)'
National Tier 1 hybrid: affirmed at 'A(tha)'
Export Import Bank of Thailand:
Long-term foreign currency IDR: downgraded to 'BBB' from 'BBB+'; Outlook Stable
Short-term foreign currency IDR: downgraded to 'F3' from 'F2'
Support Rating: affirmed at '2'
Support Rating Floor: downgraded to 'BBB' from 'BBB+'
National Long-term Rating: affirmed at 'AAA(tha)'; Outlook Stable
National Short-term Rating: affirmed at 'F1+(tha)'
National senior unsecured debt: affirmed at 'AAA(tha)'
Standard Chartered Bank (Thai):
Long-term foreign and local currency IDRs: downgraded to 'BBB+' from 'A-'(A minus); Outlook Stable
Short-term foreign and local currency IDRs: affirmed at 'F2'
Individual Rating: affirmed at 'B/C'
Support Rating: downgraded to '2' from '1'
National Long-term Rating: affirmed at 'AA+(tha)'; Outlook Stable
National Short-term Rating: affirmed at 'F1+(tha)'
United Overseas Bank (Thai):
Long-term foreign currency IDR: downgraded to 'BBB+' from 'A-'(A minus); Outlook Stable
Short-term foreign currency IDR: affirmed at 'F2'
Individual Rating: affirmed at 'C'
Support Rating: downgraded to '2' from '1'
National Long-term Rating: affirmed at 'AA+(tha)'; Outlook Stable
National Short-term Rating: affirmed at 'F1+(tha)'
For further details on the sovereign downgrade, please see the commentary entitled "Fitch Downgrades Thailand to 'BBB'", available on the agency's subscriber website, www.fitchresearch.com.
Contacts: Patchara Sarayudh, Bangkok, Tel: +662 655 4761; Vincent Milton, +662 655 4759.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email: [email protected].
Disclosure: Kasikorn Asset Management Company Limited (of which KBANK holds 99.99%) owns 10% of the shares in Fitch Ratings (Thailand) Limited. No shareholder, other than Fitch Ratings Limited of the UK, is involved in the day-to-day operation of, or credit rating reviews undertaken by Fitch Ratings (Thailand) Limited.