Standard Chartered continues Asian shopping spree in Thailand
Standard Chartered continues Asian shopping spree in Thailand
BANGKOK (Agencies): Standard Chartered Bank continued its Asian shopping spree on Wednesday, signing a deal to take an initial 68.4 percent stake in Thailand's Nakornthon Bank PCL for 6.2 billion baht (US$164 million).
The U.K.-based bank, which will take management control when the deal is finalized in late June, has the option to increase its stake in Nakornthon Bank to more than 75 percent in five years time.
Standard Chartered tied up the deal just a few days after reaching an agreement with Indonesia's Bank Bali to take a 20 percent stake and management control.
"Asia has been going through tough times in the last two years, but it still remains a powerful part of the world economy and it is central to our business," said Rana Talwar, Standard Chartered's chief executive, in a speech.
"We view the current economic environment as an opportunity," he said, referring to the financial crisis which has pushed many Asian banks to open up to foreign investors for the first time.
Standard Chartered will inherit a 67-branch network, two- thirds of which are in Bangkok. Under Thai law, the British bank is currently only allowed one representative branch in the country's capital.
Under the terms of the deal, existing shareholders - including the founding Wanglee family - will see their stakes written down to nothing before the government pumps 13 billion bahts the bank to clean up the books.
According to one foreign analyst, Standard Chartered got a good deal because the government's injection will clean up problem loans, which currently total 55 percent of all lending.
"It looks like a pretty good deal for Standard Chartered. The bank should be pretty clean," said the analyst, who asked not to be named.
Analysts said Standard Chartered's move would provide a boost to other minor Thai banks desperately in need of fresh capital to cover doubtful debts.
"It means deals are more do-able," said ABN AMRO Asia's Bankok-based banking analyst Andrew Maule, adding that it was the third foreign partnership secured locally since the Thai economic crisis erupted in mid-1997.