Finding a strategic partner is not the way to sharpen the competitiveness of Siam City Bank (SCIB), but the merger and acquisition route is an option, says Phairoj Hengsakul, assistant governor of the Bank of Thailand and manager of the Financial Institutions Development Fund (FIDF).

He said the FIDF was looking for a bank with high business potential to create synergy for SCIB's business.

FIDF now holds a 47.58-per-cent stake in SCIB and is considering offers made by many groups to buy more shares from the FIDF.

"Many investors have shown interest in investing in Siam City Bank, but the fund is in no hurry to sell out, because we want a good price," Phairoj said while declining to provide more details.

Mergers and acquisitions (M&A) have been emerging around the financial world. British bank Barclays and Dutch bank ABN Amro announced on Monday an agreement to merge, in a deal worth US$91 billion (Bt3.17 trillion).

The Bank of Thailand (BOT) earlier said it encouraged mergers among Thai banks, in order to strengthen competitiveness in the sector before financial liberalisation. Any obstacles for the merger process, such as taxes and legal processes, would be eliminated.

BOT deputy governor Bandid Nijathaworn said the central bank would allow banks to make deals by themselves without intervention but that the BOT would help facilitate the process.

Earlier, it was reported that the central bank under MR Pridiyathorn Devakula's leadership wanted to make a merger and acquisition match between SCIB and BankThai. But the deal could not be accomplished, because BankThai president Phirasilp Supapholsiri recently attracted TPG Newbridge as its strategic partner.

On Tuesday, SCIB's board appointed three new directors: Chokchai Aksaranan as executive chairman, Suchart Traiprasit as chairman of the Audit Committee and Nipat Jitprasong as director of the Audit Committee. They are representatives of the FIDF replacing directors whose terms recently expired.

Phairoj said the FIDF had named three new directors instead of extending the terms of the former ones because it believed the new ones would benefit the bank. The new board has a business outlook for making decisions, while the former directors were academics.

"The fund does not intervene in the bank's business, but we do our duty as a shareholder who wants to improve the bank. Rotation is an ordinary issue if we think it proper," he said.

Phairoj denied that the former directors had weakened the bank's performance, saying SCIB's earnings remained in good shape with regular dividend payments.

Anoma Srisukkasem

The Nation