OREANDA-NEWS. Fitch Ratings has today upgraded the National Long-Term Ratings of nine financial institutions in Thailand as follows:

- Bangkok Bank Public Company Limited (BBL), Kasikornbank Public Company Limited (KBank), Siam Commercial Bank Public Company Limited (SCB), Easy Buy Public Company Limited (EB) and Maybank Kim Eng Securities (Thailand) Public Company Limited (MBKET) have been upgraded to 'AA+(tha)' from 'AA(tha)'.

- Kasikorn Securities Public Company Limited (KS), SCB Securities Company Limited (SCBS), CIMB Thai Bank Public Company Limited (CIMBT) and CIMB Securities (Thailand) Co., Ltd. (CIMBS) have been upgraded to 'AA(tha)' from 'AA-(tha)'.

The Outlooks for BBL, KBank, SCB, KS, SCBS, CIMBT, and CIMBS are maintained at Stable. The Outlooks for EB and MBKET are maintained at Negative.

Furthermore, Fitch has affirmed the National Long-Term Rating for Bank of Ayudhya Public Company Limited (BAY) at 'AAA(tha)', while revising its Outlook to Stable from Negative.

The rating actions follow the recent downgrade of the Thai sovereign's Long-Term Local-Currency Issuer Default Rating (see Fitch Reviews Thailand's Ratings, Applies Criteria Changes dated 22 July 2016). That has caused Fitch to re-assess the Thai national ratings scale and the relative position of these entities on the national ratings scale.

A full list of rating actions is at the end of this rating action commentary.

KEY RATING DRIVERS

NATIONAL RATINGS AND SENIOR DEBT

The National Ratings of BBL, KBank, and SCB reflect their standalone credit strengths, as indicated by their Viability Ratings of 'bbb+', and their credit profile relative to the best credit in the country - in this case, the sovereign. These three banks are among the largest in Thailand, with strong franchises and consistently above-average financial performances. In Fitch's view, these banks' standalone profiles have remained unchanged despite the Thai sovereign rating action, which has led to a narrowing of the gap relative to the sovereign on the national scale ratings.

The National Ratings of KS and SCBS are notched down from KBank and SCB respectively, reflecting Fitch's view that these are strategically important subsidiaries of their parents.

The National Ratings of BAY, EB, MBKET, CIMBT and CIMBS reflect Fitch's view there is a high likelihood they will receive extraordinary support from their respective foreign parent groups, if needed. These five entities are strategically important subsidiaries of their groups, due to the clear management control, strong levels of integration, and high levels of operational and financial support.

The change in Outlook at BAY also reflects a low risk of any widening gap between its credit profile and that of the Thai sovereign in the near term. A downgrade of its parent the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU; A/Negative) would not automatically lead to a downgrade of BAY's National Long-Term Rating, assuming no change in the sovereign credit profile.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

BBL, KBank, SCB and CIMBT have all issued Tier 2 notes in Thai baht that are rated one notch below their National Long-Term Ratings. The notching approach reflects subordination relative to senior unsecured debt, and is in line with Fitch's approach to rating such instruments.

RATING SENSITIVITIES

NATIONAL RATINGS AND SENIOR DEBT

The National Ratings of BBL, KBank and SCB would be impacted by any material changes in their standalone credit profiles. For example, there could be negative impact if the banks show a sharp slippage in risk-appetite discipline and sustained weakness in asset quality that leads to, or increases the risk of, significantly lower capitalisation buffers. Any further changes in the Thai sovereign's Long-Term Local-Currency IDR could also lead to a re-assessment of the National Long-Term ratings scale and the ratings for these banks relative to the sovereign.

The National Ratings of KS and SCBS would be impacted by any changes in the National Long-Term Ratings of KBank and SCB respectively. They might also be impacted by any changes in the perceived propensity of their parents to provide extraordinary support, although Fitch does not expect any such changes in the medium term.

The National Ratings of BAY, EB, MBKET, CIMBT, and CIMBS would be impacted by any changes in their parent groups' ability to provide support. Any rating changes at BTMU, ACOM Co., Ltd or Malayan Banking Berhad would likely lead to similar changes at BAY, EB and MBKET, respectively (although there is no upside for BAY as it is already at the top end of the scale). Material changes in the credit profile at CIMB Bank Berhad would likely have a similar impact on the ratings at CIMBT and CIMBS. For all five entities, any material weakening in the parent groups' propensity to support the Thai subsidiaries could also lead to a change in the National Ratings, although Fitch does not view this as likely in the medium term.

SUBORDINATED DEBT AND OTHER HYBRID SECURITIES

The subordinated debt ratings of BBL, SCB, Kbank, and CIMBT are broadly sensitive to the same considerations that might affect the banks' National Long-Term Ratings.

The rating actions included in this review are as follows:

BBL

National Long-Term Rating upgraded to 'AA+(tha)' from 'AA(tha)'; Outlook Stable

National long-term subordinated debt upgraded to 'AA(tha)' from 'AA-(tha)'

KBank

National Long-Term Rating upgraded to 'AA+(tha)' from 'AA(tha)'; Outlook Stable

National long-term subordinated debt upgraded to 'AA(tha)' from 'AA-(tha)'

SCB

National Long-Term Rating upgraded to 'AA+(tha)' from 'AA(tha)'; Outlook Stable

National long-term subordinated debt upgraded to 'AA(tha)' from 'AA-(tha)'

KS

National Long-Term Rating upgraded to 'AA(tha)' from 'AA-(tha)'; Outlook Stable

SCBS

National Long-Term Rating upgraded to 'AA(tha)' from 'AA-(tha)'; Outlook Stable

EB

National Long-Term Rating upgraded to 'AA+(tha)' from 'AA(tha)'; Outlook Negative

National long-term senior debt upgraded to 'AA+(tha)' from 'AA(tha)'

MBKET

National Long-Term Rating upgraded to 'AA+(tha)' from 'AA(tha)'; Outlook Negative

National long-term senior debt upgraded to 'AA+(tha)' from 'AA(tha)'

CIMBT

National Long-Term Rating upgraded to 'AA(tha)' from 'AA-(tha)'; Outlook Stable

National long-term subordinated debt upgraded to 'AA-(tha)' from 'A+(tha)'

CIMBS

National Long-Term Rating upgraded to 'AA(tha)' from 'AA-(tha)'; Outlook Stable

BAY

National Long-Term Rating affirmed at 'AAA(tha)'; Outlook revised to Stable from Negative