Bangkok--12 May--Moody's
Moody's Investors Service has revised the outlook for CIMB Investment Bank Berhad's ("CIMB") local currency and foreign currency long-term/short-term issuer ratings of Baa1/P-2 to positive from stable.
"The change in outlook reflects the improving capability of CIMB Bank Berhad ("CIMB Bank"; A3/P-1/D+) -- CIMB's larger sister company, and with which it is closely integrated -- to provide it with support, if needed," says John Tham, a Moody's Vice-President and Senior Credit Officer.
The outlook for CIMB Bank's bank financial strength rating (BFSR) of D+ is positive.
CIMB and CIMB Bank are the key investment and commercial banking subsidiaries of CIMB Group Holdings Berhad ("the holdco").
CIMB Bank is also the holdco's largest subsidiary, and through which -- as indicated -- Moody's expects any support, if needed, to be extended to CIMB.
Currently, CIMB's issuer ratings incorporate very high support from the holdco, and which translates into multiple-notch rating uplift from its stand-alone credit profile.
Moody's notes that the holdco's actual ability to provide support to CIMB is due to CIMB Bank's financial strength (BFSR of D+) and the likely availability of systemic support from the Malaysian authorities, in case of need.
"Therefore, an upgrade of CIMB Bank's BFSR would also mean that Moody's saw an increase in the holdco's support capability," adds Tham.
Moody's notes that CIMB's capital level is now modest -- when viewed against the volatile nature of its earnings -- due to capital payments to its parent since a group reorganization in 2006.
However, Moody's also recognizes that the bulk of CIMB's financial risks are currently shouldered by the larger and more systemically important CIMB Bank, and acknowledges -- as indicated -- the likelihood of support, if needed.
The last rating action on CIMB was taken on July 20, 2009 when its issuer ratings of A3/P-1 were lowered to Baa1/P-2 primarily as a result of the change in the systemic support assumption.
The principal methodology used in rating CIMB Investment Bank was Moody's "Global Securities Industry Methodology", published in December 2006 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.
Headquartered in Kuala Lumpur, Malaysia, CIMB Investment Bank reported total assets of RM7.8 billion as at December 31, 2009.
Singapore
John Moh Kan Tham
VP - Senior Credit Officer
Financial Institutions Group
Moody's Singapore Pte Ltd.
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