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NEWS UPDATES 20 January 2010

Foreign investors in race for Thai bank stake

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Thailand snapped back on to foreign investors’ radar yesterday, as HSBC, Korea Development Bank (KDB) and a local lender jostled for a $900 million stake in seventh-ranked Siam City Bank (SCIB), Reuters reported.

Europe’s biggest bank and state-owned KDB faced a tough competing bid by Thanachart Capital’s Thanachart Bank, which is 49 percent-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 percent 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.

HSBC is also in the process of placing a bid for the remaining units that Royal Bank of Scotland is selling in Asia, sources have told Reuters. Final bids for Siam City were due by Jan 25, the source said.

The market expected 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,” he said.

Chaiyaporn Nompitakcharoen, head of research at Bualuang Securities in Bangkok, said “with more bidders, the selling price will tend to be higher.” He expects bids in the range of 30-32 baht a share.

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.

Thanachart, however, appeared 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. SCIB has 407 branches across Thailand.

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