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Fitch Affirms 5 Thai Subsidiaries of North Asian Financial Institutions
September 29, 2016 / 7:46 AM / a year ago

Fitch Affirms 5 Thai Subsidiaries of North Asian Financial Institutions

(The following statement was released by the rating agency) BANGKOK, September 29 (Fitch) Fitch Ratings has affirmed the National Long-Term Ratings on five Thai subsidiaries of North Asian financial institutions. The following have been affirmed at 'AAA(tha)' with Stable Outlook: - Bank of China (Thai) Public Company Limited (BOCT), - Industrial and Commercial Bank of China (Thai) Public Company Limited (ICBCT), and - ICBC (Thai) Leasing Company Limited (ICBCTL). Easy Buy Public Company Limited (EB) has been affirmed at 'AA+(tha)' with Negative Outlook. The Negative Outlook for EB is consistent with the Negative Outlook of its parent ACOM Co., Ltd. (ACOM; A-/Negative). Capital Nomura Securities Public Company Limited (CNS) has been affirmed at 'AA-(tha)' with Stable Outlook. A full list of rating actions is included at the end of this commentary. KEY RATING DRIVERS NATIONAL RATINGS AND SENIOR DEBT The National Ratings of BOCT, ICBCT, EB and CNS are driven by Fitch's view that these are strategically important subsidiaries of their respective parents - namely Bank of China Ltd. (BOC; A/Stable), Industrial and Commercial Bank of China Limited (ICBC; A/Stable), ACOM, and Nomura Holdings, Inc. (NH; A-/Negative, Viability Rating: bbb). This is because the parents have large stakes in and control over the subsidiaries, and there is name- and brand-sharing, management integration and histories of support. Fitch believes that there is a high probability of extraordinary support for the subsidiaries if required. Moreover, the agency expects the change in BOCT's immediate parent from BOC to Bank of China (Hong Kong) Limited (BOCHK; A/Stable) - a direct subsidiary of BOC - to have limited impact on the propensity or the ability of the group to support BOCT. The shareholding change is pending regulatory approval from Thai and Hong Kong authorities. For further details on the shareholding transfer, refer to the non-rating action commentary "Fitch: Bank of China's Sale of Thai Subsidiary Won't Have Rating Impact" dated 6 July 2016 and available at CNS's rating is driven by the Viability Rating of NH as Fitch does not factor in Japanese sovereign support flowing through to this subsidiary. Hence CNS's rating is sensitive to changes in the parent's Viability Rating and not the Issuer Default Rating. The National Ratings of ICBCTL are equalised with those of ICBCT to reflect Fitch's view that it is a core subsidiary of the bank. ICBCTL forms a key part of the bank's strategy, accounting for 31% of ICBCT's consolidated loans at end-June 2016 and 31% of its consolidated revenues in 1H16. The senior debt ratings for ICBCTL (Long-Term and Short-Term), EB and CNS are consistent with the National Ratings at these entities, in accordance with Fitch's criteria. GUARANTEED BONDS The ratings on ICBCTL's bonds guaranteed by ICBCT are based entirely on an unconditional and irrevocable guarantee provided by the parent. ICBCTL's guaranteed bonds are rated at the same level as ICBCT's National Long-Term Rating. The Stable Outlook of the guaranteed bonds is consistent with the guarantor's Outlook. RATING SENSITIVITIES NATIONAL RATINGS AND SENIOR DEBT The National Ratings at BOCT, ICBCT, and ICBCTL are already at the top end of the scale and no upside is possible. However, the ratings on these subsidiaries could be downgraded if the ratings of their respective parents are downgraded. The changes in the ratings or credit profile at the respective parents of EB and CNS could similarly affect the National Ratings. Any material changes in Fitch's view on the parents' propensity to provide extraordinary support to their respective subsidiaries could result in a change in the National Ratings. For example, a significant reduction in ownership or level of commitment to provide financial support could indicate a material weakening in propensity to provide support, which will have a negative impact on the ratings. However, Fitch does not view this as likely in the near term. GUARANTEED BONDS The ratings of ICBCTL's guaranteed bonds are the highest on the national scale; therefore there is no potential rating upside. ICBCTL's guaranteed bonds could be affected by any negative rating action on ICBCT. The rating actions are as follows: BOCT: - National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable - National Short-Term Rating affirmed at 'F1+(tha)' ICBCT: - National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable - National Short-Term Rating affirmed at 'F1+(tha)' ICBCTL: - National Long-Term Rating affirmed at 'AAA(tha)'; Outlook Stable - National Short-Term Rating affirmed at 'F1+(tha)' - National Long-Term Rating on bonds guaranteed by ICBCT affirmed at 'AAA(tha)' ; Outlook Stable - National Long-Term Rating on senior unsecured bonds affirmed at 'AAA(tha)' - National Short-Term Rating on unsecured unsubordinated debenture programme affirmed at 'F1+(tha)' EB: - National Long-Term Rating affirmed at 'AA+(tha)'; Outlook Negative - National Short-Term Rating affirmed at 'F1+(tha)' - National Long-Term Rating of senior unsecured bonds affirmed at 'AA+(tha)' CNS: - National Long-Term Rating affirmed at 'AA-(tha)'; Outlook Stable - National Short-Term Rating affirmed at 'F1+(tha)' - National Short-Term Rating on unsecured unsubordinated debenture programme affirmed at 'F1+(tha)' Contact: Primary Analysts Parson Singha, CFA (CNS) Senior Director +66 2108 0151 Fitch Ratings (Thailand) Limited Park Ventures, Level 17 57 Wireless Road, Lumpini, Patumwan, Bangkok 10330 Patchara Sarayudh (EB) Director +66 2108 0152 Jindarat Laotaveerungsawat (ICBCT & ICBCTL) Associate Director +66 2108 0153 Jackerin Jeeradit (BOCT) Associate Director +66 2108 0163 Secondary Analysts Patchara Sarayudh (ICBCT & BOCT) Director +66 2108 0152 Jackerin Jeeradit (CNS, ICBCTL & EB) Associate Director +66 2108 0163 Committee Chairperson Mark Young Managing Director +65 6796 7229 Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: 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 on Applicable Criteria Global Bank Rating Criteria (pub. 15 Jul 2016) here Global Non-Bank Financial Institutions Rating Criteria (pub. 15 Jul 2016) here National Scale Ratings Criteria (pub. 30 Oct 2013) here Additional Disclosures Solicitation Status here Endorsement Policy here ail=31 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 WEB SITE AT 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. Copyright © 2016 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. 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Users of Fitch's ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided "as is" without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. 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