Japan-Based JTSB And TCSB Ratings Lowered To #A-# On Ongoing I Outlooks Stable

Stocks and Financial Services Press Releases Wednesday April 25, 2018 17:51
TOKYO--25 Apr--S&P Global Ratings

TOKYO (S&P Global Ratings) April 25, 2018--S&P Global Ratings today said it has lowered its long- and short-term issuer credit ratings on both Japan Trustee Services Bank Ltd. (JTSB) and Trust & Custody Services Bank Ltd. (TCSB) by one notch each to 'A-/A-2'. At the same time, we removed the ratings from CreditWatch, where we placed them with negative implications on March 31, 2017, after four shareholders announced their signing of a memorandum to integrate the businesses of JTSB and TCSB. The outlooks on the long-term ratings on both custodian banks are stable.

We resolved the CreditWatch placements after an announcement that JTSB and TCSB are integrating their businesses, including changing their shareholder composition and establishing an intermediate holding company on Oct. 1, 2018. We downgraded JTSB and TCSB to reflect our view that the likelihood of external support from a dominant shareholder is likely to weaken because the integrated group, made up of both custodian banks, will have more diversified shareholders. As a result, their creditworthiness should reflect more of their unsupported group credit profile (GCP), in our view.

We regard the integrated group as a highly strategic member of the Sumitomo Mitsui Trust group because: Sumitomo Mitsui Trust Holdings Inc. will be the largest shareholder of the intermediate holding company; we believe trust banking services are a core business for the Sumitomo Mitsui Trust group and asset administration services are closely aligned with its mainstream business and customer base; and a large portion of the integrated group's fees from entrusted assets will come from Sumitomo Mitsui Trust Bank Ltd. (SMTB).

We believe the unsupported GCP of the integrated group is neither the same nor better than the GCP of the Sumitomo Mitsui Trust group. Therefore, we lowered our ratings on JTSB and TCSB by one notch, bringing them below the GCP of the Sumitomo Mitsui Trust group.

The stable outlooks on JTSB and TCSB reflect our view that our ratings on both custodian banks will likely remain stable over the next two years. They also reflect the stable outlook on SMTB, the major operating subsidiary of the Sumitomo Mitsui Trust group, and our view that JTSB's and TCSB's business integration will proceed as planned. We might consider upgrading both custodian banks if we: revise upward the GCP of the Sumitomo Mitsui Trust group; or revise upward the unsupported GCP of the integrated group due to improved capitalization as measured in our risk-adjusted capital framework.

Conversely, we might consider downgrading JTSB and TCSB if we revise downward the GCP of the Sumitomo Mitsui Trust group and view the unsupported GCP of the integrated group, made up of both custodian banks, as below the GCP of the Sumitomo Mitsui Trust group. However, we currently believe this is an unlikely scenario.

In addition, we might consider revising our assessment of the group status of the integrated group if we see changes in the likelihood of external support as JTSB and TCSB move toward full integration in 2021.

Latest Press Release

CIMB THAI posts THB 537.4 million net profit for 9M2018

Mr. Kittiphun Anutarasoti, President and Chief Executive Officer of CIMB Thai Bank PCL, stated that according to the unreviewed consolidated financial results for the nine months ended 30 September 2018, CIMB Thai group recorded a consolidated net profit...

Bangkok Bank encourages customers to use digital banking instead of branch counters while increasing the efficiency of its CDMs to enable bill payments, top ups and cash change

Bangkok Bank invites customers to use digital channels for transactions to reduce the amount of transactions at their branches in order to save costs and capture new customers. The bank has recently kicked off its project to increase the efficiency of...

TMB strengthens its leading position in mutual fund service by partnering with Eastspring.

TMB strengthens its leading position in mutual fund service by partnering with Eastspring. With THB12 bn gain from TMBAM deal, pre-provision operating profit for the 9 months rose 76% to THB26,360 million. The Bank also set higher provision in...

KASIKORNBANK announces the nine-month period of 2018 net profit of Baht 31,426 Million

Mr. Pipit Aneaknithi, President of KASIKORNBANK, said KASIKORNBANK announced net profit for the nine-month period of 2018, KBank and its subsidiaries reported net profit of Baht 31,426 Million, an increase of Baht 2,795 Million or 9.76% over the same...

World Bank Group launches new multi-donor fund in support of SDG implementation

WASHINGTON, Oct. 18, 2018 - Today, the World Bank Group launched the Partnership Fund for the Sustainable Development Goals (SDG Fund) in support of global efforts to meet the SDGs. The aim of the multi-donor SDG Fund is to incentivize catalytic...

Related Topics