TRIS Rating Co., Ltd. has placed a CreditAlert with “negative” implication for the ratings of Small and Medium Enterprise Development Bank of Thailand (SME Bank) and its debentures. The “negative” CreditAlert reflects TRIS Rating’s increased concerns over the bank’s asset quality.
TRIS Rating reported that SME Bank was established in 2002 under the Small and Medium Enterprise Development Bank of Thailand Act of Parliament B.E. 2545 (2002) to take over the SME-supporting function as well as finances and operations of the Small Industry Finance Corporation (SIFC), which was constituted under the Small Industry Finance Corporation Act B.E. 2534 (1991). The SME Bank is a state enterprise and is regarded as one of the Specialized Financial Institutions (SFIs). At the end of 2005, the Ministry of Finance (MOF) held a 96.92% stake in the SME Bank. Although the Ministry of Industry (MOI) currently has no equity stake in the SME Bank, the SME Bank Act stipulates that SME Bank shall operate under the supervision of both the MOF and the MOI.
TRIS Rating said that as a policy bank, the SME Bank’s major role is to grant secured or unsecured loans to, invest in equity of, and provide financial assistance and business know how to all types of small and medium enterprises (SMEs). To compensate for the potential credit risk, SME Bank is entitled to receive various types of implicit and explicit support from the government. One type of support involves financial reimbursement from the MOF, subject to Cabinet approval, should there be losses incurred as a result of policy lending.
TRIS Rating said, the current “AA-” ratings of SME Bank and its debentures are enhanced from its stand-alone credit profile because of strong government support as SME Bank was set up to support government policies to promote the development of SME sector. TRIS Rating is now on the process of a full review for the credit profile of SME Bank. Resolution of the CreditAlert status is dependent on the bank’s asset quality and the government’s future policy to support SME Bank. -- End
Small and Medium Enterprise Development Bank of Thailand (SME Bank)
Company Rating: AA-
Issue Rating:
SME087A: Bt5,000 million senior debentures due 2008 AA-
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Copyright 2006, 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.
TRIS Rating reported that SME Bank was established in 2002 under the Small and Medium Enterprise Development Bank of Thailand Act of Parliament B.E. 2545 (2002) to take over the SME-supporting function as well as finances and operations of the Small Industry Finance Corporation (SIFC), which was constituted under the Small Industry Finance Corporation Act B.E. 2534 (1991). The SME Bank is a state enterprise and is regarded as one of the Specialized Financial Institutions (SFIs). At the end of 2005, the Ministry of Finance (MOF) held a 96.92% stake in the SME Bank. Although the Ministry of Industry (MOI) currently has no equity stake in the SME Bank, the SME Bank Act stipulates that SME Bank shall operate under the supervision of both the MOF and the MOI.
TRIS Rating said that as a policy bank, the SME Bank’s major role is to grant secured or unsecured loans to, invest in equity of, and provide financial assistance and business know how to all types of small and medium enterprises (SMEs). To compensate for the potential credit risk, SME Bank is entitled to receive various types of implicit and explicit support from the government. One type of support involves financial reimbursement from the MOF, subject to Cabinet approval, should there be losses incurred as a result of policy lending.
TRIS Rating said, the current “AA-” ratings of SME Bank and its debentures are enhanced from its stand-alone credit profile because of strong government support as SME Bank was set up to support government policies to promote the development of SME sector. TRIS Rating is now on the process of a full review for the credit profile of SME Bank. Resolution of the CreditAlert status is dependent on the bank’s asset quality and the government’s future policy to support SME Bank. -- End
Small and Medium Enterprise Development Bank of Thailand (SME Bank)
Company Rating: AA-
Issue Rating:
SME087A: Bt5,000 million senior debentures due 2008 AA-
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Copyright 2006, 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.