Connect with us

Banking

Moody’s affirms Bangkok Bank’s ratings on Bank Permata takeover

Bangkok Bank Plc agreed to buy 89.1% of Indonesia’s PT Bank Permata for about US$2.7 billion.

Boris Sullivan

Published

on

Singapore, December 18, 2019 — Moody’s Investors Service has today affirmed the Baa1 foreign currency long-term bank deposit ratings of Bangkok Bank Public Company Limited’s (BBL) with a positive outlook.

Loading...

Moody’s has also affirmed BBL’s Baseline Credit Assessment (BCA) and adjusted BCA at baa1.

BBL’s outlook is positive, in line with the positive outlook on Thailand’s sovereign rating (Baa1 positive).

Ratings rationale

Today’s rating action follows the announcement by BBL on 12 December 2019 that it will acquire a 89.12% stake in Bank Permata Tbk (P.T.) (Baa3 review for upgrade, ba1) from Standard Chartered Bank (A1 stable, baa1) and PT Astra International Tbk.

The transaction is subject to regulatory approvals from the Bank of Thailand and Indonesia’s Financial Services Authority, as well as approval from the BBL’s shareholders. The affirmation of BBL’s baa1 BCA reflects Moody’s expectation that the bank’s standalone credit profile, as reflected by its solvency and liquidity, will broadly remain stable after the planned acquisition.

The proposed acquisition will weaken BBL’s capitalization, because the bank plans to fund the purchase with internal resources and funding sources other than new equity. Also, Bank Permata’s asset quality, as reflected by its stock of non-performing loans and performing restructuring loans, is weaker than that of BBL.

Nevertheless, Moody’s expect that the impact on BBL’s financial profile from the acquisition is manageable in terms of asset quality and liquidity because of Permata’s relatively small balance sheet compared to the acquirer.

Also, BBL’s strong funding and liquidity, as reflected by its dominant market share in Thailand, will also continue to support its standalone credit profile. BBL’s baa1 adjusted BCA is in line with its baa1 BCA, because the bank does not benefit from affiliate support. The affirmation of the ratings of Tier-2 securities reflects the fact that ratings and assessments are notched from BBL’s adjusted BCA.

Moody’s affirmation of BBL’s Baa1 foreign currency long-term bank deposit ratings and A3 long-term counterparty risk ratings and A3(cr) counterparty risk assessments take into account the bank’s baa1 adjusted BCA and Moody’s assumption of very high level of support from the Government of Thailand during times of stress.

The support assumption is based on the bank’s systemic importance arising from its 11% and 13% market shares in system loans and deposits, respectively, as of 30 June 2019. Moody’s does not have particular governance concerns for BBL and does not apply corporate behavior adjustment to the entities.

WHAT COULD CHANGE THE RATINGS UP

Bangkok Bank’s foreign currency long-term senior unsecured and bank deposit ratings could be upgraded if the sovereign rating is upgraded.

WHAT COULD CHANGE THE RATINGS DOWN

Factors that could result in a downgrade include a downgrade of Thailand’s sovereign rating. Bangkok Bank’s BCA could be downgraded if its asset quality and capital deteriorate significantly post-acquisition.

Asean

12 Things to Know about the ASEAN Catalytic Green Finance Facility (ACGF)

The ACGF is an ASEAN Infrastructure Fund initiative managed by ADB’s Southeast Asia Department Innovation Hub. It helps Southeast Asian governments prepare and finance infrastructure projects promoting environmental sustainability and contributing to climate change goals.

Asian Development Bank

Published

on

Southeast Asia faces an infrastructure investment shortfall of more than $100 billion a year, which may have worsened amid the COVID-19 pandemic.

Loading...
(more…)

Continue Reading

Banking

Thai cabinet approves 350 billion baht Aid for COVID-hit Businesses

Thailand unveiled new measures to help small and medium COVID-hit businesses in the tourism industry hit by a liquidity crunch.

Olivier Languepin

Published

on

The Thai cabinet has approved assistance worth 350 billion baht($11 Billion) to help businesses affected by COVID-19 with soft loans and asset warehousing.

Loading...
(more…)

Continue Reading

Banking

APAC Banks to Face Portfolio Valuation Losses As Yields Rise

The latest data suggest that Fitch-rated banks in Hong Kong, India, Indonesia, Malaysia and Taiwan have the largest AFS securities portfolios, and display particular sensitivity to changes in yields.

Avatar

Published

on

Fitch Ratings-Hong Kong/Singapore-21 March 2021: A rise in yields for long-dated sovereign bonds will result in near-term losses for Asia-Pacific (APAC) banks as they recognise valuation changes on their available-for-sale (AFS) bond portfolios, but the capital impact should be manageable for most rated banks, says Fitch Ratings.

Loading...
(more…)

Continue Reading

Most Viewed

Subscribe via Email

Enter your email address to subscribe and receive notifications of new posts by email.

Join 13,965 other subscribers

Latest

Trending