BAY takes over GE Money and AIG's title loan provider

The move is part of the country's fifth largest bank plan to boost its consumer banking business.

This is not the first time that BAY had tightened alliance with GE which is currently holding 33 per cent in the Thai bank. Early last year, the bank also acquired GE Capital Auto Lease, car leasing business from GE, one of the country's largest consumer finance businesses.

According to BAY's press release, the bank and GE Capital has agreed in principle for the sale worth around Bt13.75 billion or US$391 million. Though the proposed transaction is subject to various regulatory, corporate and shareholder approvals, as well as the completion of a definitive agreement.

Veraphan Teepsuwan, BAY's Chairman said, "The prospective purchase of GE Money will leverage the BAY-GE synergies and at the same time, enhance BAY's competitiveness and economies of scale. This will be another key milestone indicating the strength of our partnership and further reflects GE Capital's commitment in BAY."

Dmitri Stockton, President and CEO of GE Capital Global Banking said, "We have enjoyed a strong and productive relationship with our colleagues at BAY, and this transaction meets our corporate objectives of building scale and leveraging the strength of our partnerships in key emerging markets,".

GE Money Thailand is the country's largest card issuer, with over 2.2 million cards in circulation through its Central and Robinson credit cards and joint ventures with Tesco and Bank of Ayudhya (Krungsri Credit Card).

BAY and GE Money Thailand will continue to operate "business as usual" and further details will be announced upon the conclusion of these discussions.

In addition, BAY also announced to take over AIG's CFG Services Co Ltd (CFGS), a title loan provider. The transaction, subject to the approval of the Bank of Thailand and BAY's shareholders, is expected to be completed by the end of September 2009. Under the terms of the agreement, BAY will acquire 100 per cent of the shares of CFGS.

CFGS has assets of approximately Bt2 billion as of December 31, 2008, with a loan portfolio of approximately Bt1.5 billion.

Tan Kong Khoon, President and CEO of BAY said, "This transaction will allow BAY to enter into a new customer segment that is currently underserved by traditional banking products. CFGS has a strong presence in the title loan market with nationwide coverage of 163 branches. CFGS, known under the Srisawad Money on Wheels brand, possesses strong brand loyalty among its target customers. This acquisition is in line with our strategy to add variety to our consumer banking business."

Sabby Ray, Chief Executive Officer, AIG Consumer Finance Group (Asia) Ltd, said "CFGS is an attractive business with tremendous opportunity for growth. This transaction will give BAY an opportunity to expand its consumer finance business to the next level. CFGS is well established with a strong distribution network and experienced staff. Our customers will enjoy broader product range and our employees will have greater opportunity for growth in the new organization."

As of March 31, 2009, BAY has Bt535 billion in loans, Bt524 billion in deposits and 583 branches nationwide. It ranks as the fifth largest bank in Thailand.

Blackstone Advisory Services provided financial advice to AIG in connection with AIG's global restructuring program. Deutsche Bank acted as financial advisor and Linklaters served as legal counsel to AIG on this transaction.

Phatra Securities acted as financial advisor and Allen & Overy (Thailand) served as legal counsel to Bank of Ayudhya on this transaction.