TRIS Rating has upgraded the company and subordinated debenture ratings of Bank of Ayudhya PLC (BAY) to “AAA” and “AA+”, respectively, from “AA-” and “A+”, and has revised its outlook to “stable” from “positive”. The rating upgrade follows The Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) announcement on 18 December 2013, concerning its success in share tender offer of shareholdings in BAY from GE Capital International Holdings Corporation (GECIH), and the other shareholders. After the successful of the acquisition through the Voluntary Tender Offer (VTO), BTMU will become the largest shareholder, holding 72.01% stake in BAY. BAY will become a strategically important subsidiary of BTMU, and also has stronger business position in the Thai banking industry. The rating upgrade, therefore, reflects three notches enhancement from BAY’s stand-alone rating. The “stable” outlook reflects the expectation that BAY will benefit from stronger business profile and improving financial performances, after merging with BTMU Bangkok branch. The outlook also reflects strong business and financial support from new shareholder, BTMU, as a strategically important subsidiary of the BTMU Group.
On 2 July 2013, BAY announced that GECIH and BTMU signed the Share Tender Agreement. Under the terms of this agreement, BTMU will launch a share tender offer for all BAY shares (approximately 6,074 million shares) at Bt39 per share. GECIH will participate in the tender offer and tender its entire shareholding (approximately 1,538 million shares) at the tender offer price. The share tender offer commenced on 7 November 2013 and ended on 13 December 2013.
On 18 December 2013, BTMU announced the completed share acquisition transactions. BTMU becomes the new major shareholder in BAY, holding 72.01% stake in BAY, and also becomes a strategic partner with the Ratanarak Group which holds 25% stake in BAY. In accordance with the One Presence Policy of the Bank of Thailand (BOT), BTMU and BAY will integrate BTMU Bangkok branch with BAY. Pursuant to a Conditional Branch Purchase Agreement (BPA) signed with BAY on 18 September 2013, BTMU will integrate BTMU Bangkok branch with BAY though the contribution in kind of the BTMU Bangkok branch business to BAY within one year from the date of the acquisition of BAY shares through the VTO. In exchange for the contribution in kind, BAY will issue 1,143,221,782 common shares to BTMU, and BTMU’s ownership in BAY is expected to be 76.44% after the integration. This integration will enhance BAY’s business profile and strengths in terms of well-balanced loan portfolio mix of retail, corporate, and small-medium enterprises.
BAY is the fifth-largest Thai commercial bank in terms of total assets, with 8% in market share in assets, 9% in loans, and 8% in deposits as of September 2013. BAY’s total consolidated assets reached Bt1,145 billion. BTMU is the wholly-owned subsidiary of Mitsubishi UFJ Financial Group Inc. (MUFG), Japan’s largest financial group and one of the world’s largest financial groups. BTMU has a sound financial profile, an adequate risk management system, and close business links with affiliated companies in MUFG. As of September 2013, BTMU’s full foreign branch in Thailand had the asset size of Bt548 billion (C.B.1.1. report), with 5% market share in assets, 3% in loans, and 2% in deposits.
TRIS Rating Co., Ltd./www.trisrating.com Contact: santaya@trisrating.com, Tel: 0-2231-3011 ext 500/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand Copyright 2013, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information. All methodologies used can be found at http://www.trisrating.com/en/rating_information/rating_criteria.html.