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Fitch downgrades CIMB Securities (Thailand); ratings under Rating Watch Negative

Fitch Ratings downgraded CIMB Securities (Thailand) Co. Ltd.'s national long-term rating to AA-(tha) from AA(tha) and placed all the company's ratings on Rating Watch Negative.

The rating action follows CIMB Group Holdings Bhd.'s sale of a 50% stake in CIMB Securities International Pte. Ltd., the direct parent of CIMB Securities (Thailand), to China Galaxy Securities Co. Ltd. unit China Galaxy International Financial Holdings Ltd.

Fitch said Feb. 14 that the sale shows a decline in CIMB Group's inclination to provide support to its Thai unit. The sale is also expected to have negative impact on the role and integration of CIMB Securities (Thailand) within the group in the medium term.

Fitch has yet to asses the level of institutional support that CIMB Securities (Thailand) may receive from its new shareholder. However, any level of support is unlikely to match that of CIMB Group, the rating agency added.

The Rating Watch Negative placement reflects Fitch's assessment that there may be a further reduction in the parent's capacity to support the company after the sale is finalized. It expects to resolve the placement within the next six months once it gets clarity on the level of institutional support for the Thai company.

Meanwhile, Fitch affirmed the long- and short-term foreign currency issuer default ratings of United Overseas Bank (Thai) PCL at A- and F2, respectively. The bank's national long- and short-term ratings were affirmed at AAA(tha) and F1+(tha).

The agency also affirmed the national long-term ratings of CIMB Thai Bank PCL and Maybank Kim Eng Securities (Thailand) PCL at AA(tha) and AA+(tha), respectively. The companies' short-term ratings were affirmed at F1+(tha).

Fitch believes the three Thai entities will receive extraordinary support from their respective parents, which hold majority stakes and exercise management control of the Thai units. The companies parents are Singapore's United Overseas Bank Ltd., Malaysia's CIMB Bank Bhd. and Malayan Banking Bhd.

The outlooks on the ratings are stable.