TRIS Rating Co., Ltd. has affirmed the ratings of Thai Military Bank PLC (TMB) and its subordinated debentures (TMB07NA) at "BBB+" and "BBB", respectively. At the same time, TRIS Rating has assigned the rating of "BBB" to TMB's proposed up to Bt8,000 million subordinated debentures. The rating outlook of TMB remains "positive". The ratings reflect the extended franchise value after the three-way merger scheme of TMB with DBS Thai Danu Bank PLC (DTDB) and the Industrial Finance Corporation of Thailand (IFCT). The ratings also take into account the stronger capital base after the bank's recapitalization in 2003. However, these strengths are partially constrained by the transitional risk during the reorganization following consolidation with DTDB and IFCT in September 2004.
The "positive" outlook reflects the expectation of TMB's improved asset quality and profitability. The three-way merger among TMB, DTDB, and IFCT creates Thailand's fifth largest bank in terms of assets. Moreover, the strengths of each individual partner are expected to create synergy that will enhance franchise value for TMB. However, TRIS Rating will continue to closely monitor transitional risks that might be arising after the reorganization.
TRIS Rating reported that, after recapitalization in September 2003, TMB has been in a stronger financial position. The bank was able to set aside full provisions, to strengthen its Tier-1 capital ratio at 8%, and to redeem its Super Caps (hybrid debt instruments) and subordinated debentures, which helped the bank reduce interest expenses significantly. In addition, transfer of non-performing loans (NPLs) from its subsidiary, Phayathai Asset Management Co. (PAMC) to BBC Asset Management Co., Ltd. (BAM) lowered its consolidated NPLs. The three-way merger in September 2004 is expected to create synergy and to enhance TMB's franchise value through contribution of three parties; IFCT's strengths in project finance and its established corporate and small and medium enterprise (SME) customer base, DTDB's high-quality SME customer base and retail network, and TMB's local market expertise and strong distribution platform.
At the end of September 2004, TMB ranks fifth among Thai commercial banks in terms of total assets, having Bt672,222 million in total assets, up from Bt407,068 million at the end of June 2004 (ranked eighth). However, after the merger, TMB had to reorganize its operations and human resource management, which creates transitional risk while forging cooperation from staff of the three entities. Integration of the merger is likely to take time to realize the bank's mission and goals, TRIS Rating said. --End
Thai Military Bank PLC (TMB) Company Rating: Affirmed at BBB+ Issue Ratings: TMB07NA: Bt6,000 million subordinated debentures due 2007 Affirmed at BBB Up to Bt8,000 million subordinated debentures due 2015 BBB Rating Outlook: Positive
The "positive" outlook reflects the expectation of TMB's improved asset quality and profitability. The three-way merger among TMB, DTDB, and IFCT creates Thailand's fifth largest bank in terms of assets. Moreover, the strengths of each individual partner are expected to create synergy that will enhance franchise value for TMB. However, TRIS Rating will continue to closely monitor transitional risks that might be arising after the reorganization.
TRIS Rating reported that, after recapitalization in September 2003, TMB has been in a stronger financial position. The bank was able to set aside full provisions, to strengthen its Tier-1 capital ratio at 8%, and to redeem its Super Caps (hybrid debt instruments) and subordinated debentures, which helped the bank reduce interest expenses significantly. In addition, transfer of non-performing loans (NPLs) from its subsidiary, Phayathai Asset Management Co. (PAMC) to BBC Asset Management Co., Ltd. (BAM) lowered its consolidated NPLs. The three-way merger in September 2004 is expected to create synergy and to enhance TMB's franchise value through contribution of three parties; IFCT's strengths in project finance and its established corporate and small and medium enterprise (SME) customer base, DTDB's high-quality SME customer base and retail network, and TMB's local market expertise and strong distribution platform.
At the end of September 2004, TMB ranks fifth among Thai commercial banks in terms of total assets, having Bt672,222 million in total assets, up from Bt407,068 million at the end of June 2004 (ranked eighth). However, after the merger, TMB had to reorganize its operations and human resource management, which creates transitional risk while forging cooperation from staff of the three entities. Integration of the merger is likely to take time to realize the bank's mission and goals, TRIS Rating said. --End
Thai Military Bank PLC (TMB) Company Rating: Affirmed at BBB+ Issue Ratings: TMB07NA: Bt6,000 million subordinated debentures due 2007 Affirmed at BBB Up to Bt8,000 million subordinated debentures due 2015 BBB Rating Outlook: Positive