S&P lowers Yuanta Commercial view to negative

Standard & Poor’s said it revised the outlook on the BBB+ long-term issuer credit rating on Yuanta Commercial Bank to negative from stable.

The agency also said it affirmed the bank’s BBB+ long-term and A-2 short-term issuer credit ratings, as well as the cnA+ long-term and cnA-1 Greater China regional scale ratings on the bank.

The outlook revision reflects a view that Yuanta Bank’s overall credit profile will continue to change in line with that of its parent, Yuanta Financial Holdings Co. Ltd., given the bank’s core status within the group.

The group’s overall capitalization is expected to weaken if Yuanta Financial’s recently announced plan to acquire Ta Chong Bank Ltd. through a cash and share swap materializes, S&P said.

Ta Chong Bank’s capitalization is substantially lower than that of the Yuanta group and the deduction of goodwill from the proposed transaction could weaken the group’s capitalization, although the share-swap would somewhat alleviate this pressure, the agency said.

The Yuanta group may find it difficult to sustainably maintain its strong capitalization given the group’s ambitious strategy for above-average growth and capital efficiency, S&P said.

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