Fitch expects the change in BOCT's immediate parent from BOC to BOCHK to have limited impact on the propensity or the ability of the group to support BOCT, whose 'AAA(tha)' rating is driven by Fitch's expectation there is high probability of extraordinary support for the subsidiary, if needed. BOC will remain as the ultimate parent for BOCT, and BOCT will remain a strategically important subsidiary of the group after the sale, given the group's aspiration to provide cross-border financing for Chinese enterprises in ASEAN region.
BOCHK's ability to support BOCT, as indicated by its Issuer Default Rating of 'A', is on par with that of BOC. It is, however, driven by BOCHK's 'a' Viability Rating (VR) which reflects its sound standalone financial strength and backed by institutional support from BOC as Fitch views BOCHK as a core subsidiary of BOC.
The acquisition is likely to have limited impact on BOCHK's VR because the transaction will have marginal impact on its financials and franchise in the near term. Fitch expects BOCHK to continue to maintain its solid above-peers capitalisation after the acquisition.
The restructuring is part of the group's wider strategy to allocate group resources more efficiently and to enhance BOCHK's business and geographical diversification (see "Fitch: Restructuring Plan by BOC and BOCHK Won't Have Rating Impact" dated 26 May 2015). BOCHK also announced on 30 June 2016 that it planned to acquire Bank of China (Malaysia) Berhad, the same day it said it would acquire BOCT. The two subsidiaries made up less than 1% of BOC's net assets at end-2015. BOCHK plans to acquire other ASEAN assets from BOC by the end of 2016.
BOCT had total assets of THB58bn at end-2015, one of the lowest among banks in Thailand. Fitch expects BOCT to continue tapping the group's relationships with companies involved in trade flows and investments between China and Thailand.