TRIS Rating Views that Credit Ratings of TBANK Are Not Affected by the Potential Exit of BNS

Stocks and Financial Services Press Releases Wednesday December 23, 2015 09:31
Bangkok--23 Dec--TRIS Rating
TRIS Rating has viewed that the credit ratings of Thanachart Bank PLC (TBANK) will not be affected by the potential exit by one of the bank's major shareholder, Bank of Nova Scotia (BNS).

Thanachart Capital PLC, a major shareholder of TBANK through a 50.96% ownership stake, informed the Stock Exchange of Thailand (SET) that BNS, which holds a 48.99% stake in TBANK, has changed its strategy in the Asia-Pacific region. BNS plans to divest its investment in TBANK by offering its stake to other large, financially strong and reputable international financial institutions. The new owner must be acceptable to TCAP, and the divestiture will be subject to approval by the Bank of Thailand (BOT).

BNS has been a strategic partner of TCAP and a major shareholder of TBANK since 2007. By leveraging its experience and knowledge, BNS improved TBANK's work procedures and risk management systems. However, the divestiture by BNS will not affect TBANK's credit profile because the contributions BNS made to TBANK have been internalized into TBANK's operations. As a result, TBANK will maintain continuity in all of its lines of business after BNS divests its shareholding. TRIS Rating will continue to monitor the changes in TBANK's ownership structure, and the effect on TBANK's credit profile, over the medium to long term.

TBANK, a core subsidiary of TCAP, is the sixth-largest Thai commercial bank as measured by asset size. TBANK had a 6.5% market share in loans and a 6.0% share in deposits as of September 2015. TBANK is the largest auto loan provider in Thailand, with approximately 22% market share in auto loans as of December 2014.

TRIS Rating currently assigns a "AA-" company rating to TBANK, "A+" ratings for TBANK's subordinated debentures, and "A" ratings for TBANK's hybrid Tier 2 capital security, with a "stable" outlook.

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