HSBC, S Korea in race for $900m Thai bank stake
Tuesday, 19 January 2010
BANGKOK/SEOUL, Jan 18 (Reuters): Thailand snapped back on to foreign investors' radar Monday, as HSBC, Korea Development Bank and a local lender jostled for a $900-million stake in seventh-ranked Siam City Bank.
Europe's biggest bank and state-owned KDB face a tough competing bid by Thanachart Capital's Thanachart Bank, which is 49 per cent-owned by Canada's Bank of Nova Scotia, said a source close to the deal, who asked not to be identified as bidding was confidential.
The race for a 47.6 per cent stake in the Thai lender -- the biggest that is still up for sale -- underscores the lure of Southeast Asia as the global banking industry seeks new funding sources and as Thailand's economic recovery gathers momentum.
Despite a stubborn political crisis marked by violent street protests, an airport blockade and an assassination attempt in the past two years, Thailand is seeing a tentative recovery in investment, drawing $1.9 billion in foreign fund inflows in 2009.
The main Thai stock index rose 63 per cent last year, making it Asia's seventh-best performer.
Final bids for Siam City are due by January 25, the source said.
The market expects bids to be at around 1.5 times book value, Bryan Song, head of research at BofA-Merrill Lynch in Seoul, wrote in a note. "Since it's the largest (Thai) bank left for sale, the deal may be closed at a premium."
SCIB shares rose 1.8 per cent to 28.50 baht, reversing losses last week on concern that bids would be below market expectations. The overall market was flat.
"This news is positive," said Chaiyaporn Nompitakcharoen, head of research at Bualuang Securities in Bangkok. "With more bidders, the selling price will tend to be higher."
He expects bids in the range of 30-32 baht a share.
An official at HSBC declined to comment, but the bank has a large presence across Asia and often participates in auctions of banking or financial industry assets.
KDB has said it wants to be among the world's top 20 commercial and investment banks by 2020, targeting acquisitions at home and abroad to secure deposit bases ahead of the government's planned sale of a stake.
It offered to buy more than 25 per cent of Lehman Brothers before Lehman collapsed in September 2008, but talks failed over price and market uncertainty at the time.
Thanachart, however, appears to be the leading bidder, said BofA-Merrill's Song and another analyst. The Thai bank has been buying SCIB shares on the market, helping to more than double SCIB's share price over the past eight months to 28 baht.
A Thanachart official declined to comment.
SCIB, founded in 1941 by the Thai government and royal family, focuses on small and medium-sized businesses and is worth $1.8 billion. But it has been under-used and has a very low loan/assets ratio, BofA-Merrill said.
SCIB has 407 branches across Thailand.
HSBC is in the process of placing a bid for the remaining units that Royal Bank of Scotland is selling in Asia, sources have told Reuters. HSBC also nearly bought 51 per cent of South Korea's KEB, though the auction fell apart late in 2008.
Europe's biggest bank and state-owned KDB face a tough competing bid by Thanachart Capital's Thanachart Bank, which is 49 per cent-owned by Canada's Bank of Nova Scotia, said a source close to the deal, who asked not to be identified as bidding was confidential.
The race for a 47.6 per cent stake in the Thai lender -- the biggest that is still up for sale -- underscores the lure of Southeast Asia as the global banking industry seeks new funding sources and as Thailand's economic recovery gathers momentum.
Despite a stubborn political crisis marked by violent street protests, an airport blockade and an assassination attempt in the past two years, Thailand is seeing a tentative recovery in investment, drawing $1.9 billion in foreign fund inflows in 2009.
The main Thai stock index rose 63 per cent last year, making it Asia's seventh-best performer.
Final bids for Siam City are due by January 25, the source said.
The market expects bids to be at around 1.5 times book value, Bryan Song, head of research at BofA-Merrill Lynch in Seoul, wrote in a note. "Since it's the largest (Thai) bank left for sale, the deal may be closed at a premium."
SCIB shares rose 1.8 per cent to 28.50 baht, reversing losses last week on concern that bids would be below market expectations. The overall market was flat.
"This news is positive," said Chaiyaporn Nompitakcharoen, head of research at Bualuang Securities in Bangkok. "With more bidders, the selling price will tend to be higher."
He expects bids in the range of 30-32 baht a share.
An official at HSBC declined to comment, but the bank has a large presence across Asia and often participates in auctions of banking or financial industry assets.
KDB has said it wants to be among the world's top 20 commercial and investment banks by 2020, targeting acquisitions at home and abroad to secure deposit bases ahead of the government's planned sale of a stake.
It offered to buy more than 25 per cent of Lehman Brothers before Lehman collapsed in September 2008, but talks failed over price and market uncertainty at the time.
Thanachart, however, appears to be the leading bidder, said BofA-Merrill's Song and another analyst. The Thai bank has been buying SCIB shares on the market, helping to more than double SCIB's share price over the past eight months to 28 baht.
A Thanachart official declined to comment.
SCIB, founded in 1941 by the Thai government and royal family, focuses on small and medium-sized businesses and is worth $1.8 billion. But it has been under-used and has a very low loan/assets ratio, BofA-Merrill said.
SCIB has 407 branches across Thailand.
HSBC is in the process of placing a bid for the remaining units that Royal Bank of Scotland is selling in Asia, sources have told Reuters. HSBC also nearly bought 51 per cent of South Korea's KEB, though the auction fell apart late in 2008.