• 
• 

Published on September 14, 2007

Two banks from China and Malaysia approached the Finance Ministry yesterday seeking approval to buy 19 per cent of ACL Bank from Bangkok Bank.

The two are the Industrial and Commercial Bank of China (ICBC), the largest on the mainland, and CIMB Bank, Malaysia's second biggest by assets.

A financial source said Bangkok Bank - which faces a deadline from the Bank of Thailand to sell its shares in ACL Bank to investors - took the two banks to meet Finance Minister Chalongphob Sussangkarn.

Regulations stipulate that a foreign bank wanting to own more than 5 per cent of any Thai bank needs Finance Ministry approval. Since the ministry in this case also owns 30.61 per cent of ACL Bank, the ministry must speak with the new investors on behalf of a major shareholder.

Both foreign banks are looking at building a long-term relationship with ACL Bank, the source said.

"Now, they want to purchase shares only from Bangkok Bank, but in the future they may hope to buy them from the ministry, as well. But we cannot identify whether the deal [currently under negotiation] will be sealed this year. I believe the minister may not want to decide on his own; instead, the bank's [Bangkok Bank] board will have to decide," he said.

To comply with the central bank's requirements, Bangkok Bank had to reduce its stake in ACL Bank from 19 per cent to 10 per cent by the end of this past June and to zero by the end of the year, in accordance with an earlier schedule. Bangkok Bank asked the Bank of Thailand (BOT) to extend the deadline but was turned down yesterday.

Assistant Governor Samart Buranawata-nachoke said the BOT would slap a penalty charge on Bangkok Bank after it failed to sell off about 9 per cent in ACL Bank by June.

He said the central bank rejected the request of the country's largest bank to extend its permission for the bank to unload the retail-bank stake in line with the financial-sector master plan's "one presence" principle.

After the deadline, the BOT wanted Bangkok Bank to dispose of the shares as soon as possible. Bangkok Bank will eventually be punished for failing to follow regulations.

"As we did not approve the extension as requested, the bank will have to hurry to dump the shares," Samart said.

Earlier, Bangkok Bank chairman Chatri Sophonpanich said both Thai and foreign investors were interested in buying the ACL Bank stake and that the bank was waiting for the right price. Also, the transaction was not easy to complete under the current financial and economic conditions.

If Bangkok Bank sold the shares now, it would not suffer a significant loss from the investment, since it had already written the asset down. The book value of the small bank is about Bt8 a share, although its reserve is quite strong, Chatri said.

Bangkok Bank senior vice president Suvarn Thansathit recently said if the bank was not successful in selling ACL Bank on time, then his bank would have to pay a fine. However, Bangkok Bank does not want that to happen, because its image would be tarnished.

ACL Bank chairman Charnchai Musignisakorn also recently said his bank could possibly seek a strategic partner once its major shareholders reduced their stakes in it.

Anoma Srisukkasem,

 Somruedi     Banchongduang

 The Nation