Thailand’s Thanachart Bank has proposed a rights issue to raise Bt40bn ($1.2bn) to fund the purchase of Siam City Bank (SCIB).
Bangkok is selling the 47.6 per cent stake in SCIB it acquired 10 years ago in the wake of the Asian financial crisis. The rights issue is dependent on Thanachart placing the winning bid for the stake, but it is facing little competition.
Shareholders in Thanachart, including Canada’s Bank of Nova Scotia, which holds a 49 per cent stake, gave approval for the rights issue this week.
Analysts estimate that the government stake is worth between $350m and $400m, but given that Thanachart already owns almost 5 per cent of SCIB, the purchase of the government stock will force a tender offer from Thanachart for the rest of the shares, most of which are listed.
SCIB’s share price dropped 1.2 per cent on Wednesday after rising more than 12 per cent last week.
Analysts say the two banks are an attractive fit. Thanachart has concentrated on consumer leasing, particularly car hire purchase, while SCIB has an extensive branch network. The two have little overlap, avoiding the necessity for expensive and politically sensitive post-deal restructuring.
The Thanachart-SCIB deal is the second prospective bank deal in Thailand in as many weeks.
Industrial and Commercial Bank of China, the world’s largest bank by market capitalisation, agreed to buy 19.3 per cent of ACL Bank, which is owned by Bangkok Bank, late last month for Bt3.55b. ICBC is the frontrunner to buy the government’s 30.6 per cent stake in ACL.
If that happens, Korn Chatikavanij, the finance minister, is expected to waive the 49 per cent cap on foreign ownership of Thai banks. The cap is normally only lifted in the case of distressed financial institutions, but that is not the case with ACL, and the government’s willingness to allow ICBC to take a controlling stake has intrigued the markets, with both Citigroup and HSBC keen to move into Thailand.
Thailand has 14 banks, but the market is dominated by four big players: Bangkok Bank, Krung Thai Bank, Siam Commercial Bank, and Kasikorn Bank. The government says it is keen to increase competition, but Mr Korn has ruled out issuing any more banking licences to overseas players.
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