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September 29, 2005

S&P Raises Asian Bank Ratings on Stronger Government Support

S&P has upgraded its Asian banking outlook in general and 18 specific banks in Korea, Malaysia, Thailand, and Taiwan, based on a premise of increased government support during crises.

Ratings of banks in China and Japan were deemed to already incorporate such an expectation, while those in the Philippines, Indonesia, and India, while also incorporating an expectation of support, were not deemed worthy of upgrade due to the weaker financial condition of their sovereigns.

This seems more like a change of methodology than anything else, as nothing cited here is new at all.

In addition, S&P upgraded 7 Chinese banks on stronger financial conditions and foreign partners.

More after the jump, including list of banks upgraded:

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 Standard & Poor's expectations that future extraordinary government support for systematically important banks is likely. The extensive actions taken by the governments of the abovementioned and other Asian countries to support their respective banking sectors over the past decade, most notably during and after the 1997-1998 Asian financial crisis, are demonstrative of government propensity to intervene in the financial sector to prevent bank failures. Standard & Poor's estimates show that the governments in Asia have extended well over US$500 billion in support, direct and indirect, to domestic banks in their jurisdiction during the period. China's government has extended the most in absolute terms, followed by Japan, Indonesia, Korea, Thailand, Malaysia, Taiwan, and India.

Specific banks upgraded:

All to A- from BBB+

-BBL (BBB- to BBB+)
-BAY (BB+ to BBB-)
-KBank (BBB- to BBB)
-KTB (BB+ to BBB-)
-SCB (BBB- to BBB)
-TMB (BBpi to BBBpi)

-Bumi-Commerce (BBB to BBB+)
-RHB Bank (BBB- to BBB)

-Chiao Tung Bank (A- to A)
-Chinatrust (BBB+ to A-)
-First Cml (BBB to BBB+)
-ICBC (A- to A)
-Land Bank (A- to A)

-BOC (BBB- to BBB+)
-CCB (BBB- to BBB+)
-ICBC (BBB- to BBB+)
-ABC (BBpi to BBBpi)
-BoComm (BB+ to BBB-)
-CITIC Group (BB to BB+)
-Guangdong Dev Bank (CCCpi to Bpi)

* S&P Ratings Definitions and Criteria

Posted by The Banker at September 29, 2005 10:58 AM

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