Thai Banks Expansion : A Challenging Task

The free flow of capital triggered by the economic integration under the Association of Southeast Asian Nations (ASEAN) Economic Community – AEC – has prompted Thailand’s banks to consider expanding to other countries in the region, but market watchers and analysts believe more effort and time will be needed to make it a reality.

The governments of Myanmar, Vietnam and Cambodia, who are restructuring their economics, and loosening foreign direct investment regulations to stimulate growth, presents major opportunities for Thailand’s banks to take baby steps in venturing out of their home base.  But Thai also face competition from their peers in China as well as lenders from saturated markets like Singapore, who are looking abroad for growth.

Bangkok Bank (BBL) appears to have an edge over its peers. With the vision of BBL founder Chin Sophonpanich, Bangkok Bank opened the first oversea branch in Hong Kong in 1954, and earlier this month, BBL was the first Thai bank that was granted license to operate in resource-rich Myanmar. This success is part of its effort of continual engagement as the bank opened its representative office in Yangon almost two decades ago without any banking service,

Merger and Acquisition (M&A) and joint venture (JV) are not the models BBL opts for. Rather, Thailand’s largest lender prefers to set up green field operations by opening oversea branches or establishing a local brand with 100% ownership.

For Siam Commercial Bank (SCB), the past experience has influenced the future strategy. After the joint venture with a Vietnamese partner in 1995 failed to be a success, SCB aims for a new model: independence from local partners.

With the arrival of AEC, SCB focuses on Cambodia and Lao where the bank already has operating branches. Though the bank was not among the first licensees to operate in Myanmar, SCB executives vowed to continue the effort to tap into growing economy of the former reclusive state.

In addition to CLMV countries (Cambodia, Lao PDR, Myanmar and Vietnam), Kasikorn Bank (KBank) is also eyeing expansion into Indonesia, the most populous nation in this region.

“Originally, we planned to open a representative office which would be turned into a bank branch. But the Indonesian government preferred us to buy a local bank,” said KBank’s President Teeranun Srihong, “So, we had to review our policy. If we buy a small one, it does not give much impact on our overall business, while the acquisition of a big local bank may lead to cultural and HR issues.”

Despite that, KBank has gained stronger presence in China. The cooperation with its Chinese partner, China Minsheng Bank, went well. The first KBank branch was opened in Shenzhen in 2008 and was allowed to operate transaction in Yuan currency.

Like other banks who refused to miss the train to Yangon, KBank also had an office in Myanmar and would soon open a local bank in Lao. Singapore was also under its radar for expansion.

Unlike other banks, state-owned Krungthai Bank (KTB) focused on business around the border areas to support the supply chain activities of its clients.

KTB has branches in Cambodia, Lao and Vietnam, and a representative office in Myanmar. However, with government as backup, KTB gains upper-hand for business expansion thanks to the help of high-level negotiation.

“We are now building up our internal strength,” said KTB President Vorapak Tanyawong, “When chance arises, we are ready to acquire any foreign financial institutions.”

It remains to be seen how the major Thai banks will adapt and apply their models. The next 14 months will be critical for them to prepare their resources and develop their strategies so that they can join the race with other regional banking peers in penetrating into untapped financial markets of growing Southeast Asian economies.

 

photocredit: freedigitalphotos.net

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.