August 18, 2014 / 11:27 AM / 3 years ago

Fitch Assigns TMB's Basel III Tier 2 Issue 'A(tha)' Rating

(The following statement was released by the rating agency) BANGKOK, August 18 (Fitch) Fitch Ratings has rated TMB Bank Public Company Limited's (TMB; BBB-/Stable) proposed Thai baht-denominated subordinated unsecured notes at 'A(tha)'. This would be the first Basel III-compliant Tier 2 issue by TMB and the proceeds will be used to replace some of the legacy Tier 2 notes that may be redeemed and amortised. KEY RATING DRIVERS The Basel III Tier 2 notes are rated one notch below the anchor rating to reflect their higher loss-severity risk relative to senior unsecured instruments arising from their subordinated status. Key terms of the notes include a non-viability trigger (defined as emergency capital assistance from the central bank or any other empowered government agency), with a partial rather than mandatory full write-down feature. The Tier 2 notes are more senior than any Additional Tier 1 securities with loss-absorption features. In the event of a write-down, the Tier 2 notes would be written down on a pari passu basis with all other Tier 2 loss-absorbing instruments with write-down features of the issuer. TMB's National Long-Term Rating (A+(tha)/Stable) is used as the anchor rating and it is based on the company's stand-alone financial strength. The bank's credit profile is viewed as the best indicator of non-performance risk. No additional notching has been applied as there are no going-concern loss-absorption features. The bank's overall financial performance - particularly its asset quality - has improved in recent years, although its profitability remains the lowest among Thailand's mid-sized banks. However, capitalisation and liquidity are sound and compare well with its peers'. RATING SENSITIVITIES Any changes in TMB's stand-alone credit profile and in its National Long-Term Rating would have an impact on the rating of these notes. A material reversal of recent gains in key financial measures such as asset quality and earnings could lead to a downgrade. So too could a material increase in risk appetite if not offset by strengthened buffers in terms of capital and profitability. An upgrade is unlikely in the near term because Fitch expects further improvement in TMB's overall credit profile to be gradual and this has been factored into the ratings. The other ratings of TMB are unaffected and are as follows: - Long-Term IDR: 'BBB-'; Outlook Stable - Short-Term IDR: 'F3' - USD3.0bn senior unsecured medium-term note programme: 'BBB-' - Viability Rating: 'bbb-' - Support Rating: '3' - Support Rating Floor: 'BB+' - National Long-Term Rating: 'A+(tha)'; Outlook Stable - National Short-Term Rating: 'F1(tha)'; - National subordinated debt rating: 'A(tha)' Contacts: Primary Analyst Trin Siriwutiset Associate Director +662 108 0154 Fitch Ratings (Thailand) Limited Park Ventures, Level 17 57 Wireless Road, Lumpini Patumwan, Bangkok 10330 Secondary Analyst Patchara Sarayudh Director +662 108 0152 Committee Chairperson Jonathan Cornish Managing Director +852 2263 9901 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com. 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. Additional information is available at www.fitchratings.com. Applicable criteria, "Global Financial Institutions Rating Criteria", dated 31 January 2014, "Rating FI Subsidiaries and Holding Companies" dated 10 August 2012, and "National Scale Rating Criteria", dated 30 October 2013, are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Rating FI Subsidiaries and Holding Companies here National Scale Ratings Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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