TAIPEI/SINGAPORE, February 07 (Fitch) Fitch Ratings has
revised Standard Chartered Bank (Taiwan) Limited (SCBTL)'s
Outlook to Stable from Negative and affirmed its Long-term
Issuer Default Rating (IDR) at 'AA-'. A rating breakdown is
Rating Action Rationale
The rating action follows that of Standard Chartered Bank
(SCB) on 7 February 2013 (see 'Fitch Revises Standard
Chartered's Outlook to Stable; Affirms 'AA-'' at
www.fitchratings.com). SCB is the parent and sole owner of
SCBTL's IDRs are aligned with those of SCB as Fitch views
SCBTL as a core subsidiary within the group's international
network. This is supported by their aligned risk management, a
shared brand name and operational support from SCB.
SCBTL's Viability Rating reflects its adequate balance sheet
strength, prudently managed asset quality and renewed earnings
momentum following the removal of legacy problem loans from
Hsinchu International Bank (HIB) which SCB acquired in 2006.
Rating Drivers and Sensitivities - IDR and VR
Any rating action on SCB's IDRs could trigger a similar
rating action on SCBTL. Meanwhile, SCBTL's VR may be upgraded if
the bank demonstrates an ability to contain asset quality
deterioration during a cyclical downturn and to greatly enhance
internal capital generation on a sustained basis. The rating may
be downgraded if its mortgage portfolio, accounting for over 50%
of its loan book, comes under pressure from an unexpected and
sharp correction of the Taiwan property market.
Senior Unsecured and Subordinated Debt
SCBTL's senior unsecured bonds are rated at the same level
as its National Long-Term rating, as they constitute direct,
unconditional, unsecured and unsubordinated obligations of the
bank. Its subordinated bonds are rated one notch below the
issuer's National Long-Term rating, to reflect their
subordinated status and the absence of going-concern
loss-absorption feature. These notching practices are in
accordance with Fitch's criteria on rating senior unsecured bond
instruments and bank regulatory capital of financial
institutions. Any rating action on SCBTL's Long-term Ratings
could trigger a similar move on their debt ratings.
SCB acquired HIB in 2006 and renamed it SCBTL. SCBTL
integrated SCB Taiwan Branch in 2007 and acquired American
Express Bank Taiwan and Asia Trust in 2008. SCBTL has total
assets of TWN719.8bn (USD25.7bn, over 4% of SCB group's total
assets) and had a deposit market share of 1.92% in Taiwan at
end-June-2012A Credit Update for SCBTL is available on
Standard Chartered Bank (Taiwan) Limited (SCBTL) ratings:
- Long-Term IDR: affirmed at 'AA-'; Outlook revised to
Stable from Negative
- Short-Term IDR affirmed at 'F1+'
- National Long-Term rating: affirmed at 'AAA(twn)'; Stable
- National Short-Term rating affirmed at 'F1+(twn)'
- Viability Rating: affirmed at 'bbb'
- Support Rating affirmed at '1'
- Senior unsecured debt National Long-Term rating: affirmed
- Subordinated debt National Long-Term rating: affirmed at