GE Money to take 25% stake in BAY
The US financial-services giant, GE Money, has submitted a letter of intent to buy a 25-per-cent stake in Bank of Ayudhya (BAY) at Bt16 per share via private placement, according to Charlotte Donavanik, first senior executive vice president of BAY.
The deal, which has been under negotiation since last year, has been finally concluded and as a listed firm, BAY is expected to inform the Stock Exchange of Thailand about the deal today. Donavanik said that GE would have to buy BAY's shares via private placement, and they are likely to be sold by BAY's major shareholder. The bank's chairman, Krit Ratanarak, is the bank's major shareholder. She said that as GE has requested a 25-per-cent stake in the mid-sized bank, it would need approval from the Bank of Thailand, whose regulations prohibit financial institutions from holding stakes of more than 5 per cent between them. However, a source close to the deal said earlier that the authorities are likely to approve the deal as MR Pridiyathorn Devakula, the BOT governor, has reportedly welcomed the development. As a direct purchase by GE Money would breach the current foreign-ownership limit, the US firm is expected to execute the transaction by merging the Thai unit it recently established - GE Money Retail Bank - with the Thai lender, the source said. BAY's foreign ownership already exceeds 20 per cent, and the limit is 25 per cent. The source compared the planned deal to the one by Singapore's United Overseas Bank last year when it merged its Thai unit, UOB Radanasin Bank, with the Bank of Asia. The source added that Krit is expected to sell his shares in the bank to GE but is likely to maintain a stake in the bank - which his family has owned for decades - that is either equal to or larger than the stake acquired by GE Money. Market watchers consider it a win-win deal. GE Money has had a partnership with BAY in the credit-card business for some years. Both parties have their eye on the future and see a tie-up as a strategic move that will prepare them for the intense competition expected to follow the sector's liberalisation, the source added. BAY's shares closed at Bt18.40 apiece yesterday. Its total assets were Bt627.78 billion as of September 30, 2005. It has 472 branches nationwide and 8,275 employees.
Somruedi Banchongduang The Nation
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