Fitch Ratings has revised the rating Outlook on Sumitomo Mitsui Trust Bank (Thai) Public Company Limited (SMTBT) to Negative from Stable. At the same time, Fitch has affirmed the bank's National Long-Term Rating of 'AAA(tha)', and its National Short-Term Rating of 'F1+(tha)'.
The revised Outlook follows a similar rating action on the Long-Term Issuer Default Rating (IDR) at SMTBT's parent, Sumitomo Mitsui Trust Bank, Limited (SMTB, A-/Negative), on 4 August 2020 (see "Fitch Revises Outlook for Sumitomo Mitsui Trust Bank to Negative" at www.fitchratings.com/site/pr/10131430).
KEY RATING DRIVERS
SMTBT's National Long-Term Rating is driven by Fitch's belief that the bank would receive extraordinary support from its parent, SMTB. The parent wholly owns the Thai subsidiary, and there are high levels of operational integration and management control between the two banks. There is also a record of financial support from SMTB to SMTBT.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
A revision of SMTB's Long-Term IDR back to Stable would most likely result in similar rating action on SMTBT's National Long-Term Rating. There is no upside to SMTBT's rating, which is at the top end of the Thai national ratings scale.
Factors that could, individually or collectively, lead to negative rating action/downgrade:
A reduced ability by SMTB to support SMTBT, as indicated by a downgrade of the former's Long-Term IDR, would most likely lead to a downgrade in the subsidiary's National Long-Term Rating.
SMTBT's ratings may also be downgraded if Fitch believes that the parent's propensity to support the subsidiary is reduced. This may be indicated by a substantial reduction in the level of management control, operational integration and shareholding, such as to below 75% with the presence of significant minority shareholders. However, Fitch does not expect a decline in support propensity to occur in the near term.
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
The ratings of SMTBT are linked to the credit profile of SMTB.