KRUNG THAI BANK
Fitch has affirmed the National Long-Term Rating of
The Outlook is Stable.
Key Rating Drivers
KTZ's National Long-Term Rating is driven by Fitch's expectation that its major shareholder,
KTZ's National Long-Term Rating is three notches lower than KTB's because of the bank's partial ownership of KTZ at 50%, with a significant minority shareholder that holds much of the remaining shares. This leads to potentially lower management integration and control by KTB compared with other bank-owned securities firms rated by Fitch.
Nonetheless, the ratings reflect Fitch's belief that extraordinary support is likely to be forthcoming from KTB, due to the name sharing and ongoing synergistic and operational links between KTZ and KTB. KTZ is the only entity in the KTB group operating in the securities sector, and it provides equity-related products to KTB's banking clients. Furthermore, there has been evidence of ongoing ordinary support from the bank, such as in terms of funding facilities for KTZ.
Rating Sensitivities
Factors that could, individually or collectively, lead to negative rating action/downgrade:
KTZ's National Ratings are primarily linked to the credit profile of its support provider, KTB. Any weakening in KTB's local-currency credit profile, as indicated by its National Long-Term Rating, could lead to negative rating action on KTZ.
Fitch may also downgrade KTZ's National Ratings if its strategic importance to the bank were to diminish, thereby lowering the parent's propensity to provide extraordinary support. This may happen if KTB reduces its stake in and control over KTZ, or if weakened business synergies and integration between the two start to diminish the incentives for KTB to support its securities subsidiary. Nevertheless, Fitch does not expect this to occur in the near term.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
Fitch may upgrade KTZ's National Ratings if Fitch perceives any strengthening in KTB's propensity to support KTZ. This could result from KTB raising its shareholding in KTZ to above 75%, combined with strengthened management and operational linkages between the two.
There is little prospect of any positive action due to a strengthening in the parent's ratings, as KTB's credit profile is already among the strongest within the universe of Thai entities rated by Fitch.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
KTZ's ratings are linked to the local-currency credit profile of KTB, as denoted by the shareholder bank's National Long-Term Rating.
RATING ACTIONS
Entity / Debt
Rating
Prior
Natl LT
AA-(tha)
Affirmed
AA-(tha)
Natl ST
F1+(tha)
Affirmed
F1+(tha)
Page
of 1
VIEW ADDITIONAL RATING DETAILS
Additional information is available on www.fitchratings.com
(C) 2022 Electronic News Publishing, source
