Moody's cuts Mega International to D+

Moody's Investors Service said it downgraded the banking financial strength rating of Taiwan-based Mega International Commercial Bank - the result of the merger between International Commercial Bank of China and Chiao Tung Bank - to D+ from C- and affirmed its A2/P-1 foreign-currency deposit ratings. Moody's also affirmed the Baa1 foreign-currency issuer rating of parent company Mega Financial Holding Co.

The outlook is stable.

The newly merged bank will command 5.46% of system loans and 7.06% of deposits, the agency estimated, making it Taiwan's fourth-largest bank by loans and total assets and seventh-largest by deposits. Furthermore, it will be the largest subsidiary of Mega Financial Holding, highlighting its importance within the overall group.

Moody's said that Mega International's banking financial strength rating is higher than Chiao Tung Bank's D- banking financial strength rating, reflecting the benefits derived from International Commercial Bank of China's stronger financials and franchise.

At the same time, this rating represents a downward adjustment from International Commercial Bank of China's C- banking financial strength rating, reflecting the agency's view that revenue or cost synergies will not materialize immediately after the merger because of the two banks' different focuses.

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