Banking's a headache when you have to know it all
Even though commercial banks have jumped on the bandwagon of universal service in order to become more competitive, some have yet to benefit from the status because of a lack of expertise in each financial area.
"Universal banking is more complicated than expected: it needs expertise in each financial field," said Arun Chirachavala, president of Siam City Bank (SCIB). He said the bank's subsidiaries had not yet met income targets, though they were all breaking even. The bank aims to get returns on investment from subsidiaries equal to the average industry rate of return in each sector. "One main problem of a universal-banking operation is the workforce. Although we have efficiency in the banking industry, we need more capability in other financial fields. Thus the bank is looking for strategic partners who are experts in each field to invest in our subsidiaries," said Arun. As a way of encouraging strategic partners, the bank has many alternatives, such as selling a part of the bank's shareholding or offering its subsidiaries capital-increase shares. The bank, however, will maintain its stake in each subsidiary at more than 50 per cent of total registered capital. Currently SCIB offers a full array of financial services to customers through its wholly owned subsidiaries and an affiliate. The bank has 100-per-cent stakes in Siam City Securities Ltd, Siam City Asset Management Ltd and Max Life Assurance Ltd. The bank is buying more shares to raise its stake in Ratchthani Leasing Plc to 40.33 per cent. Prasarn Trairatvorakul, president of Kasikornbank, said the bank's two new subsidiaries were set to reach break-even point within three years. Kasikornbank has five subsidiaries, two of which are Kasikorn Leasing Ltd (K Leasing) and Kasikorn Securities Ltd (K Securities), established last year. K Leasing expects to have an auto-loan portfolio of Bt10 billion on its first anniversary next month. "Once K Leasing can increase its loan portfolio to Bt30 billion, the company will be strong enough to generate significant profits for the bank," said Prasarn. "If the company's loan base reaches Bt100 billion, equal to Thanachart Bank, the country's number-one in the car-loan industry, it will be quite strong." The situation for K Securities, however, is tougher, given the sluggish stock market, but the target for its break-even point will not be postponed, he said. Despite a small portfolio of only 50 sales, the broker can make revenue equal to other securities firms that have 100 sales, Prasarn added. Subhak Siwaraksa, chief executive officer of TMB Bank, said its subsidiaries had a target of contributing 20 per cent of the bank's income over the next three years, up from 10 per cent at present. TMB Asset Management and Macquarie Securities generate good returns for the bank, though their ranking is not high. The mutual-fund operator is the fifth largest in the industry while the broker is ranked at 20.
Somruedi Banchongduang The Nation
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