Bank of Ayudhya chairman Krit Ratanarak yesterday admitted that at least five foreign investors, including GE Money Retail Bank, had expressed interest in becoming its partner.

"GE is one of those who are in talks with us. The negotiations have made some progress, but I can't say anything right now," he was quoted by Thai-language news agency Bisnews as telling the bank's annual shareholders' meeting.

Krit is a major shareholder of BAY.

Pongpinit Tejagupta and Charlotte Donavanik, BAY's president and senior executive vice president respectively, had earlier acknowledged that a few foreign investors had come knocking on the door of the country's sixth-largest bank in assets.

GE Money Retail Bank looks to have the inside track as it is already allied with BAY in the credit-card business, jointly offering the KrungsriGE Card. However, BAY's foreign ownership restriction of 49 per cent may be a major stumbling block as foreign investors already hold 32 per cent in BAY.

Pongpinit said the new partner could possibly take an ownership stake in the bank by snapping up new shares in the future.

BAY's board of directors has approved the issuance of two billion new shares, with half offered to existing shareholders and half sold to new investors through private placement.

"We have yet to decide how much we will earmark and by which method the shares will be offered," Pongpinit said.

The bank is in no hurry to issue the new shares because its capital base is strong enough to support operations for five more years, he said.

BAY's second-quarter earnings will show increases both on the year and on the quarter, thanks to rising interest income. But net profit in the third quarter will slip as the bank starts paying income tax again and sees credit demand softening from the oil crisis, he said.

"We will resume corporate income tax payments in the third quarter. The impact from record oil prices on us would become obvious in the third quarter as well," he said.

The bank reported unaudited first-quarter net profit of Bt1.81 billion, up from Bt1.53 billion last year.

Domestic interest rates will likely peak this year, depending on the oil price, he said.

"If the oil price keeps rising, it will push up interest rates further. And retail customers may spend less and this would affect business," said Pongpinit.