Moody's assigns counterparty risk assessments to nine Vietnamese banks
Moody's assigns counterparty risk assessments to nine Vietnamese banks
Actions reflect the aspects of the new bank rating methodology. Moody's Investors Service has today assigned Counterparty Risk Assessments (CR Assessments) to nine Vietnamese banks. The credit ratings assigned to the nine Vietnamese banks remain unchanged.
Moody's has assigned the following long-term CR Assessments:
1. B1(cr) assigned to Vietnam Bank for Industry and Trade (Vietinbank) and Bank for Investment and Development of Vietnam (BIDV);
2. B2(cr) assigned to Asia Commercial Bank (ACB), Military Commercial Joint Stock Bank (MB), Saigon-Hanoi Commercial Joint Stock Bank (SHB), Saigon Thuong Tin Commercial Joint-Stock Bank (Sacombank), Vietnam Prosperity Joint Stock Commercial Bank (VP Bank), Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Vietnam International Bank (VIB).
Concurrently, Not-Prime (cr) short-term CR Assessments have been assigned to all the Vietnamese banks.
This announcement follows the publication of Moody's new bank rating methodology published on 16 March 2015 (see "Banks,"https://www.moodys.com/research/Banks--PBC_179038.)
A list of all ratings for the nine Vietnamese banks can be found at the end of this press release.
RATINGS RATIONALE
ASSIGNMENT OF COUNTERPARTY RISK ASSESSMENTS
Moody's has assigned long-term and short-term CR Assessments to the nine Vietnamese banks.
CR Assessments are opinions of how counterparty obligations are likely to be treated if a bank fails, and are distinct from debt and deposit ratings in that they: (1) consider only the risk of default rather than expected loss; and (2) apply to counterparty obligations and contractual commitments rather than debt or deposit instruments.
A CR Assessment is an opinion of the counterparty risk related to a bank's covered bonds, contractual performance obligations (servicing), derivatives (e.g., swaps), letters of credit, guarantees and liquidity facilities.
For Vietnamese banks, the CR Assessment — prior to government support — is positioned one notch above their Adjusted baseline credit assessments (Adjusted BCAs). Moody's then assigns government support assumptions, in line with the same support assumptions on deposits and senior unsecured debt.
Such assignments reflect Moody's view that any support provided by government authorities to a bank — and which benefits senior unsecured debt or deposits — is very likely to benefit operating activities and obligations reflected by the CR Assessments.
Such a view is consistent with Moody's belief that governments are likely to maintain the banks' operations as a going concern to reduce contagion and preserve the banks' critical functions.
In the case of the government-controlled banks Vietinbank and BIDV, the starting points for the CR Assessments -- before government support -- are B2 and B3, respectively, based on the banks' Adjusted BCA plus one notch. Moody's then incorporates very high support assumptions from the Vietnam government (B1 stable). As a result, Moody's assigns CR Assessments of B1(cr) to both Vietinbank and BIDV.
The CR Assessments assigned to the other seven Vietnamese banks, which are majority-owned by private shareholders, are based on the following inputs: (1) these banks' Adjusted BCAs plus one notch, and (2) moderate probability of government support. As a result, Moody's assigns CR Assessments of B2(cr) to ACB, MB, Sacombank, SHB, Techcombank, VP Bank and VIB.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks published in March 2015. Please see the Credit Policy page on www.moodys.com for a copy of this methodology.
Taking into account today's announcement, the bank ratings are as follows:
Asia Commercial Bank
- Local currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Local currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- BCA and adjusted BCA remain unchanged at caa1
- Assignment of CR Assessment of B2(cr)/ Not Prime(cr)
Headquartered in Ho Chi Minh, the bank reported total assets of VND 179,610 billion (USD 8.4 billion) at end-December 2014.
Military Bank
- Local currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Local currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- BCA and adjusted BCA remain unchanged at caa1
- Assignment of CR Assessment of B2(cr)/ Not Prime(cr)
Headquartered in Hanoi, the bank had total assets of VND 200,489 billion (USD 9.4 billion) at end-December 2014.
Sacombank
- Local currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Local currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- BCA and adjusted BCA remain unchanged at caa1
- Assignment of CR Assessment of B2(cr)/ Not Prime(cr)
Headquartered in Ho Chi Minh, the bank had total assets of VND 178,939 billion (USD 8.4 billion) at end-December 2014.
VIB
- Local currency deposit ratings remain unchanged at B2/ Not Prime with a stable outlook
- Foreign currency deposit ratings remain unchanged at B2/ Not Prime with a stable outlook
- Local currency issuer ratings remain unchanged at B2/ Not Prime with a stable outlook
- Foreign currency issuer ratings remain unchanged at B2/ Not Prime with a stable outlook
- BCA and adjusted BCA remain unchanged at b3
- Assignment of CR Assessment of B2(cr)/ Not Prime(cr)
Headquartered in Hanoi, the bank had total assets of VND 80,661 billion (USD 3.8 billion) at end-December 2014.
Techcombank
- Local currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Local currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- BCA and adjusted BCA remain unchanged at caa1
- Assignment of CR Assessment of B2(cr)/ Not Prime(cr)
Headquartered in Hanoi, the bank had total assets of VND 175,902 billion (USD 8.2 billion) at end-December 2014.
VP Bank
- Local currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency deposit ratings remain unchanged at B3/ Not Prime with a positive outlook
- Local currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- Foreign currency issuer ratings remain unchanged at B3/ Not Prime with a positive outlook
- BCA and adjusted BCA remain unchanged at caa1
- Assignment of CR Assessment of B2(cr)/ Not Prime(cr)
Headquartered in Hanoi, the bank had total assets of VND 163,241 billion (USD 7.6 billion) at end-December 2014.
VietinBank
- Local currency deposit ratings remain unchanged at B1/ Not Prime with a stable outlook
- Foreign currency deposit ratings remain unchanged at B2/ Not Prime with a stable outlook
- Local currency issuer ratings remain unchanged at B1/ Not Prime with a stable outlook
- Foreign currency issuer ratings remain unchanged at B1/ Not Prime with a stable outlook
- The foreign currency senior unsecured rating remains unchanged at B1
- BCA and adjusted BCA remain unchanged at b3
- Assignment of CR Assessment of B1(cr)/ Not Prime(cr)
Headquartered in Hanoi, the bank had total assets of VND 667,132 billion (USD 31 billion) at end-December 2014.
BIDV
- Local currency deposit ratings remain unchanged at B1/ Not Prime with a stable outlook
- Foreign currency deposit ratings remain unchanged at B2/ Not Prime with a stable outlook
- Local currency issuer ratings remain unchanged at B1/ Not Prime with a stable outlook
- Foreign currency issuer ratings remain unchanged at B1/ Not Prime with a stable outlook
- BCA and adjusted BCA remain unchanged at caa1
- Assignment of CR Assessment of B1(cr)/ Not Prime(cr)
Headquartered in Hanoi, the bank had total assets of VND 650,340 billion (USD 30 billion) at end-December 2014.
SHB
- Local currency deposit ratings remain unchanged at B3/ Not Prime with a stable outlook
- Foreign currency deposit ratings remain unchanged at B3/ Not Prime with a stable outlook
- Local currency issuer ratings remain unchanged at B3/ Not Prime with a stable outlook
- Foreign currency issuer ratings remain unchanged at B3/ Not Prime with a stable outlook
- BCA and adjusted BCA remain unchanged at caa1
- Assignment of CR Assessment of B2(cr)/ Not Prime(cr)
Headquartered in Hanoi, the bank had total assets of VND 169,036 billion (USD 7.9 billion) at end-December 2014.
