Fitch Ratings has assigned Standard Chartered Bank (Vietnam) Limited (SCBVL) a first-time Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'BB' and Long-Term Local-Currency IDR of 'BBB-'. The Outlook is Stable.

Fitch Assigns SCB Vietnam First-Time 'BB' Rating; Outlook Stable
SCBVL's ratings are driven by our expectation of support from its parent, Standard Chartered Bank (SCB, A+/Negative/a), in times of need. SCB owns 100% of its Vietnam subsidiary, whose management and operations are highly integrated with its parent. Vietnam is a high-growth market that the group considers to be strategically important to its emerging market network. Fitch expects SCBVL to retain an important role in the group given Vietnam's increasing integration into regional and global supply chains. Fitch believes SCB has a strong ability to support SCBVL, whose assets accounted for only about 0.4% of the parent's assets as at end-2019.
The factors reinforcing the likelihood of the parent's support for SCBVL are counterbalanced by our view of heightened transfer and convertibility risks in Vietnam, which could impose significant constraint on SCBVL's ability to receive support from its UK-based parent, and are reflected in Vietnam's Country Ceiling of 'BB'. SCBVL's Long-Term Foreign-Currency IDR is thus capped by the Country Ceiling and its Support Rating of '3' indicates a moderate probability of support from the parent for the subsidiary. Fitch uses the parent's Viability Rating (VR) instead of its IDR as the anchor rating for institutional support due to the uncertainty over whether SCBVL would benefit from a significant buffer of qualifying junior debt that raises the parent's Long-Term IDR above its VR.
Fitch views the risk of sovereign restrictions on local-currency repayments as lower than that of foreign-currency restrictions. Hence, SCBVL's Long-Term Local-Currency IDR is rated two notches above Vietnam's sovereign rating, reflecting the parent's robust ability to support SCBVL.
Fitch has not assigned a VR to SCBVL given the high operational linkages with its parent that would render standalone assessment not meaningful. SCBVL's market share in Vietnam is modest at around 0.5% of banking system assets at end-2019. It has, however, been growing its loan book rapidly in recent years, driven by its retail segment - a trend which we expect to continue in the near to medium term as the bank capitalises on the country's young demographics and growing income.