Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily, on April 21, 2016.

 

KUALA LUMPUR: CIMB Group Holdings Bhd is planning to raise RM10 billion under an additional tier-1 capital securities programme (proposed AT-1 Programme) to strengthen the financial services entity’s capital structure, according to RAM Rating Services Bhd.

In a note yesterday, RAM said the rating firm had assigned a A1/Stable rating to the debt securities to be issued under the proposed programme.

“CIMB Group is the fifth-largest banking group in Asean [by assets], with an extensive regional footprint and a commendable universal-banking franchise.

“Nonetheless, the group’s asset quality and profitability have stayed under pressure, mainly due to the challenges facing its Indonesian operations. On the other hand, CIMB Group’s capitalisation, cost management and provision coverage have improved, thus providing a stronger buffer against further headwinds,” RAM said.

The AT-1 securities issued under CIMB Group’s proposed AT-1 Programme have a subordinated ranking and coupon payment flexibility, said RAM.

“In addition, they possess a loss-absorption feature (through write-offs or conversion into shares), which will be triggered when a non-viability event occurs or if the group’s common-equity tier-1 capital ratio falls below 5.125%,” it added.

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