Fitch Rates TMB#s Basel III Tier 2 THB Notes at #A(tha)#

Stocks and Financial Services Press Releases Tuesday May 2, 2017 18:00
Bangkok--2 May--Fitch Ratings

Fitch Ratings (Thailand) has today assigned a rating of 'A(tha)' to TMB Bank Public Company Limited's (TMB; A+(tha)/Stable) upcoming Thai baht-denominated Basel III-compliant Tier 2 subordinated unsecured debentures. At issue, the notes will have a tenor of 10.5 years.

KEY RATING DRIVERS

The Basel III Tier 2 notes are rated one notch below the anchor rating of 'A+(tha)' to reflect the notes' subordinated status and higher loss-severity risks relative to senior unsecured instruments. 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 partial rather than mandatory full write-down features.

The Tier 2 notes are senior to any Additional Tier 1 securities with loss-absorption features. If written down, the Tier 2 notes rank pari passu with TMB's other Tier 2 loss-absorbing instruments that have write-down features.

TMB's National Long-Term Rating of 'A+(tha)' is used as the anchor rating because the rating reflects the bank's standalone financial strength. Fitch believes that the bank's standalone credit profile best indicates its non-performance risk (that is, becoming non-viable). Fitch has not applied additional notching to the notes, as they have no going-concern loss-absorption features.

TMB's standalone financial strength takes into account the bank's stable asset quality and profitability as well as its sound capital and liquidity positions. TMB is Thailand's seventh-largest commercial bank, with a market share of around 6% in loans and deposits.

RATING SENSITIVITIES
Any change in TMB's National Long-Term Rating would have a similar effect on the rating of the notes.

TMB's Long-Term National Rating is sensitive to changes in the bank's standalone profile. Fitch may elect to downgrade the Long-Term National Rating if the bank's asset quality, profitability, liquidity or capitalisation were to deteriorate sharply. Conversely, the agency may upgrade its Long-Term National Rating if these factors show a sustained improvement.

The other ratings of TMB are unaffected, and are as follows:
Long-Term IDR: 'BBB-'; Outlook Stable
Short-Term IDR: 'F3'
Viability Rating affirmed: 'bbb-'
Support Rating affirmed: '3'
Support Rating Floor: 'BB+'
National Long-Term Rating: 'A+(tha)'; Outlook Stable
National Short-Term Rating: 'F1(tha)'
USD3.0 billion senior unsecured medium-term note programme affirmed: 'BBB-'
Long-term foreign-currency senior unsecured debt: 'BBB-'
THB15.0 billion Basel III Tier 2 subordinated debt rating: 'A(tha)'
Legacy Basel II subordinated debt rating: 'A(tha)'

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