Fitch Upgrades Standard Chartered Bank (Thai)’s LTLC IDR to ‘A+’

Stocks and Financial Services Press Releases Tuesday March 13, 2012 16:36
Bangkok--13 Mar--Fitch Ratings

Fitch Ratings has upgraded Standard Chartered Bank (Thai) Public Company Limited’s (SCBT) Long-Term Local Currency Issuer Default Rating (LTLC IDR) to ‘A+’ from ‘A’ and affirmed all other ratings. The LTLC IDR Outlook is Negative. A full rating breakdown is provided below.

The upgrade of the LTLC IDR reflects Fitch’s reassessment of the notching differential between parent Standard Chartered Bank’s (SC; 'AA-'/Negative) and SCBT’s ratings to one notch from two. Following the upgrade, SCBT’s rating is aligned with those of SC’s other subsidiaries in the region, which are no more than one notch below the parent’s rating. Fitch views the level of integration between SCBT and SC as having strengthened over time and SC’s propensity to support for SCBT is similar for all other subsidiaries, due to full ownership and control.

SCBT’s International, National and Support Ratings are based on SC’s ownership and support. SC’s 99.9% stake is intended as a long-term strategic holding and the group exercises effective control of the SCBT board and management. Given SC’s reputation and resources, Fitch believes there would be an extremely high probability of shareholder support, if required. The Negative Outlook on its LTLC IDR reflects that of its parent. The Outlook on its ‘BBB+’ Long-Term Foreign Currency IDR is Stable, reflecting the constraint of Thailand’s Country Ceiling.

Any change in the parent’s ratings or Outlook could impact SCBT’s ratings, as could any unexpected reduction in SC’s shareholding or propensity to support.

SCBT’s Viability Rating reflects its overall financial strength, which remains comparable to similarly rated domestic peers despite its mid-sized franchise. Its capitalisation (Fitch core capital ratio of 17% at end-June 2011) ranks highly among Fitch-rated banks in Thailand. A material increase in SCBT’s risk appetite indicated by excessive loan growth or significant concentration in certain exposures and/or deterioration in its franchise strength would most likely affect its Viability Rating negatively.

SCBT was initially founded in 1933 by the Wanglee family under the name Nakornthon Bank (NTB). NTB was nationalised as a result of the 1997 financial crisis and was later acquired by SC. SCBT ranks as the ninth-largest Thai commercial bank with a market share of less than 2% each in loans and deposits at end-June 2011.

List of SCBT’s ratings action is as follows: