S&P ups 18 Asian banks

Standard & Poor's said it revised its assessment of government support for systematically important banks in Asia, reflecting its expectation that the governments there are likely to provide extraordinary assistance in the event such banks encounter distress.

Consequently, S&P said it raised its counterparty credit ratings and issue credit ratings on 18 banks in Korea, Malaysia, Taiwan and Thailand.

The post-consolidation structure of these Asian banking systems, improved regulatory and legal framework and a demonstrated government policy orientation toward supporting the sector reinforces the agency's expectations that future extraordinary government support for systematically important banks is likely.

S&P noted the counterparty credit ratings on banks in Indonesia, India and the Philippines, however, are not being revised at this time, given that the fiscal position of the governments in the three countries are not as strong as the governments in other Asian countries previously mentioned.

Despite this, the agency noted it recognizes the willingness of the governments of Indonesia, India and the Philippines to support key banks in their systems may be no less than those of other Asian governments.

The ratings on selected banks in China and Japan already incorporate expectations of government support, S&P said.

The agency emphasized it is not assuming that Asian governments will support all distressed banks under any circumstances, but that a government's willingness to intervene in systematically important domestic banks is higher than for that on other banks.

By country, S&P said it raised the ratings on the following banks:

SOUTH KOREA: The agency is raising its counterparty credit ratings on the five major domestic commercial banks in South Korea, namely Chohung Bank, Hana Bank,

Kookmin Bank, Shinhan Bank and Woori Bank, by one notch to A- based on expectations of extraordinary government support. The short-term ratings on these commercial banks were affirmed at A-2.

MALAYSIA: S&P said it is raising by a notch its counterparty credit ratings on two major domestic banks in Malaysia, Bumiputra-Commerce Bank Bhd. and RHB Bank Bhd., reflecting the expectation of extraordinary government support if they come under stress. Malayan Banking Bhd. (Maybank, A-/stable/A-2) and Public Bank Bhd. (A-/stable/A-2) had been identified alongside Bumiputra-Commerce and RHB Bank as among Malaysia's leading banks likely to solidify their market positions even if the consolidation of the banking sector continues in the medium term.

TAIWAN: S&P said it is raising its counterparty credit ratings on five major banks in Taiwan to reflect the expectation of extraordinary government support in the event these banks come under stress. The long-term ratings on Chiao Tung Bank, Chinatrust Commercial Bank, First Commercial Bank Ltd., International Commercial Bank of China and Land Bank of Taiwan are raised by one notch, along with the short-term ratings of Chiao Tung Bank, International Commercial Bank of China and Land Bank of Taiwan.

THAILAND: S&P said it is raising its counterparty credit ratings on six major domestic banks in Thailand, based on expectations of a high level of extraordinary support that could be extended by the government to the banking system in times of stress. As demonstrated during and after the Asian financial crisis, the government had taken a highly active role in supporting the domestic banking system to provide stability as well as improve the industry structure. Reflecting its high level of importance to the system as well as a market share of just over one-fifth of system deposits, the ratings on Bangkok Bank are raised by two notches to BBB+. At the same time, the ratings on Krung Thai Bank Public Co. Ltd., Kasikornbank Public Co. Ltd., Siam Commercial Bank Public Co. Ltd. and Bank of Ayudhya Public Co. Ltd. are raised by one notch and that on TMB Bank Public Co. Ltd. to BBB(pi) from BB(pi).

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