Over the next three years, the bank plans to expand its business to the international financial arena where its expertise might not be quite enough. As a result, Kiatnakin will look for a specialist to support the bank.

"Although the bank doesn't need new overseas shareholders, we might have a foreign strategic partner to supplement the bank in its weak points. Thus, the bank may seek a foreign partner in the next few years," he noted.

Moreover, Kiatnakin will also widen its bancassurance business by cooperation with insurance companies. It will set up a new venture capital firm for the business.

Under the bank's plan to tie up with a foreign strategic partner, the bank would not offer a stake to the new partner because it does not need new overseas shareholders.

Currently, Kiatnakin's foreign shareholding meets the ceiling at 44 per cent, while the Wattanavekin family has a share of 11.46 per cent in the bank.

Supol believes Kiatnakin can survive in its small niche-bank position, even though the country's financial sector will be liberalised in future. The move will lead to more intensified competition, particularly from large foreign institutions.

"Kiatnakin does not need new foreign shareholders to support the bank's capital base because it is quite strong," Sopon said.

"But we want business partners who can help the bank to create more business opportunities. We don't want them to assist the bank to survive. So a merger with other banks would not be an option for the bank."

Small local banks are not a consolidation target for large foreign financial institutions because their business models do not match.

However, mid-sized banks are likely to need consolidation more than smaller banks because of several current disadvantages, factored by their business model.

The businesses of mid-sized banks mostly overlap with large banks, where they are at a disadvantage in branch networks and capital base. As a result, it is quite hard to compete.

Supol said Kiatnakin had high potential to grow under its three core businesses: auto hire purchase, residential projects and commercial loans. In particular, the bank has long experience in the used-car leasing loan market.

The bank plans to offer new loans of Bt15 billion this year, of which 50 per cent will be hire-purchase loans for automobiles. Meanwhile, it aims to raise deposits by Bt15 billion this year. Both its lending and deposit growth targets will gain support from outlet expansion by 10 branches nationwide from the current 19.

Somruedi Banchongduang

The Nation