Fitch Rates United Overseas Bank (Thai)#s Basel III Tier 2 Notes #AA+(tha)#

Stocks and Financial Services Press Releases Monday July 31, 2017 15:08
Bangkok--31 Jul--Fitch Ratings

Fitch Ratings has today assigned United Overseas Bank (Thai) Public Company Limited's (UOBT; AAA(tha)/Stable) upcoming issue of Thai baht-denominated Basel III-compliant Tier 2 subordinated unsecured notes a National Long-Term Rating of 'AA+(tha)'.

KEY RATING DRIVERS

The notes are rated one notch below the bank's National Long-Term Rating to reflect their subordinated status. In line with other instruments of this type issued domestically in Thailand, the notes include a non-viability trigger for loss absorption (that point being when relevant domestic authorities provide capital support to prevent operating failure), with the provision of a partial rather than a mandatory full write-down. The notes have no going-concern loss absorption features, and hence there is no additional notching for non-performance risk.

UOBT's National-Long Term Rating is driven by Fitch's view that the bank is a strategically important subsidiary of Singapore-based United Overseas Bank Limited (UOB; AA-/Stable). UOB fully controls UOBT, with 99.7% ownership, brand- and name-sharing, and a history of operational support.

The rating approach for these subordinated unsecured notes is consistent with criteria covering instruments issued by the parent that include similar non-viability and write-down features. Fitch expects UOB to provide support necessary to prevent UOBT from becoming non-viable, thereby neutralising the risk otherwise indicated by the bank's weaker intrinsic profile relative to its parent. This issue would rank pari passu with UOBT's other outstanding Tier 2 instrument, which was issued to its parent in March 2013 and included a full write-off at non-viability. However, as UOB is the primary support provider to UOBT and was the sole investor in that security, Fitch views the risk of loss severity as being different, hence this upcoming issue has been notched down once to account for the partial write-down feature.

RATING SENSITIVITIES

Any change in the National Ratings of UOBT would have a similar impact on the rating of the notes. There is no upside to the National Ratings, as they are at the top end of the scale. Fitch may downgrade the bank's National Rating if UOB reduces its propensity to provide extraordinary support to UOBT. This could be indicated by a significant reduction in ownership or by a lower commitment to provide financial support. However, Fitch does not expect these to occur in the medium term.


Latest Press Release

PTG reveals business plan in Golden Pig Year Targeting revenue and volume growth by 20% Gearing up for expansion to 2,000 service stations and joining up with business partners to create new customer experiences

"PTG Energy" targets 2019 revenue and volume growth of 20%, aiming to increase EBITDA by 40%-50% and expand service stations to 2,000 with planned investment of 3.5 billion baht in order to maintain the second position in retailed oil market share. Mr....

Photo Release: EXIM Thailand Celebrates 25th Anniversary Inviting Public and Private Sectors to Donate to Chakri Naruebodindra Medical Institute

Mr. Adul Chotinisakorn (third right), Director of Export-Import Bank of Thailand (EXIM Thailand), together with the Bank's senior management welcomed executives from private and public agencies on the occasion of EXIM Thailand's 25th anniversary at EXIM...

Prudential Thailand launches PRUsuper a unique and flexible solution targeting customers who dont like insurance

Prudential Life Assurance (Thailand) Public Company Limited ("Prudential Thailand") has launched PRUsuper link, a unique and flexible investment-linked insurance product that was developed based on the true voice of customers through an online customer...

Bangkok Bank approved that the dividend payment be paid at the rate of Baht 6.50 per ordinary share

Bangkok Bank approved that the dividend payment for the operating results of the year 2018 be paid at the rate of Baht 6.50 per ordinary share and resolved to convene the 26th annual ordinary meeting of shareholders on April 12, 2019. Bangkok Bank...

PTT Reveals 2018 Performance, Creating Energy Security, Tackling Changes for Sustainable Future,

Strengthening infrastructure, developing new businesses, raising competitive edge, along with improving people's quality of life and conserving environment, PTT grants 82.220 billion Baht of its revenues to the government as its tax payment. Mr. Chansin...

Related Topics