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Thailand Said to Seek $1 Billion in Siam City Sale
Cathy Chan


Nov. 30 (Bloomberg) -- Thailand’s central bank plans to approach potential buyers including Standard Chartered Plc and Australia & New Zealand Banking Group Ltd. this week for a stake in Siam City Bank Pcl and is seeking about $1 billion, said two people with knowledge of the matter.
The list of companies the central bank will send preliminary documents to also includes Bank of China Ltd., China Construction Bank Corp. and Bank of Nova Scotia, the people said, asking not to be identified because the process is confidential.

Thailand, wracked by violent political protests in the past two years, is easing restrictions on foreign ownership of banks to encourage investment and boost competition in the financial industry. The $1 billion price would value the central bank’s 47.6 percent holding at about 33 baht a share, according to data compiled by Bloomberg. Siam City shares rose as high as a record 29.50 baht today.

“If they get that price, that’s quite high,” said Sirinattha Techasiriwan, an analyst at Kasikorn Securities Co. who rates the shares “neutral.” “It would be good news for the stock.”

Shares of Siam City gained 3.6 percent to 29 baht at 12:14 p.m. local time. The stock has risen fourfold this year, compared with a 53 percent gain in Thailand’s SET Index.

The stake sale will be the second by the nation’s central bank since June 2008, as it sheds stakes in commercial banks seized during the 1997-1998 crisis to raise funds.

Sale by March

The central bank, which owns the Siam City stake through its Financial Institutions Development Fund, said last week it plans to start accepting bids in mid-December and aims to complete the sale by the end of March. The central bank may eventually sell its entire holding, one of the people said.

Tongurai Limpiti, the central bank assistant governor who’s in charge of the Financial Institutions Development Fund, declined to comment. Siam City President Chaiwat Utaiwan couldn’t immediately be reached.

UBS AG has been hired to arrange the sale, the people said. Companies that show initial interest will be given documents to study Siam City’s finances, they added.

Thailand’s central bank will grant new licenses to companies providing microfinance and Islamic and investment banking services, Central Bank Governor Tarisa Watanagase said on Nov. 4. Foreign banks that already operate in Thailand will be allowed to have as many as 20 branches, she said.

Limit on Holdings

Siam City Bank, Thailand’s sixth-largest by market capitalization, was nationalized in February 1998 after it missed a series of deadlines to meet capital standards. The baht’s devaluation a year earlier caused Asian currencies to tumble and half of loans at Thai banks to go bad.

The country has 14 commercial banks, including Bangkok Bank Pcl, Siam Commercial Bank Pcl and Kasikornbank Pcl. Foreigners can hold up to 49 percent of a local lender, with ownership above that limit requiring finance ministry permission. Indonesia, which has 122 commercial banks, allows foreign companies to own as much as 99 percent of a local lender.

In June 2008, the central bank agreed to sell 42 percent of BankThai Pcl to CIMB Group Sdn for 5.9 billion baht, or 2.1 baht a share. The shares have increased almost fivefold since then.

Industrial & Commercial Bank of China Ltd., the world’s biggest by market value, bought a majority stake in ACL Bank Pcl in September. ANZ opened a representative office in Bangkok in 1985. Standard Chartered bought control of Nakornthon Bank Pcl in 1999. Thanachart Bank Pcl, 49 percent owned by Canada’s Nova Scotia, holds a 4.97 percent stake in Siam City Bank, according to Siam City’s Web site.

Thailand’s economy contracted less than estimated last quarter as a nascent global recovery and government spending began to pull the nation out of its first recession in a decade. The Bank of Thailand said last month Southeast Asia’s second- largest economy is “out of recession,” citing improving employment and quarter-on-quarter GDP expansion.

bloomberg.com

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The battle for control of Thailand’s Siam City Bank is expected to enter a crucial stage this week when interested parties, including HSBC, submit final bids for the lender.

People familiar with the matter said that HSBC was likely to face stiff competition from Thanachart, a local lender that is 49 per cent owned by Canada’s Bank of Nova Scotia, and Korea Development Bank when bids close on Monday .

The potential buyers are bidding for a government-held 47.58 per cent stake in Thailand’s seventh-largest bank, with bids expected to top $800m.

FT.com / Companies / Banks - Crucial stage in battle for Siam City

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Butterfly

it's a crappy bank, surprised they think they can find a buyer for it. Didn't it almost went bankrupt a few years ago ?

I guess there are suckers everywhere,