Grab piece of Asean action, banks advised
Get foothold now as economic integration will boost regional market
Some Thai banks are expected to acquire or enter joint ventures with banks in Asean to take advantage of increasing trade and investment between Thailand and new frontier markets such as Vietnam, Cambodia, Laos and Myanmar, said global financial-service advisers.
There is a great opportunity in the financial-service marketplace for Thai banks as Asean moves towards deeper economic integration in 2015, leading to a significant increase in trade finance and trade flows, Sushil Saluja, Accenture's managing director of financial services for Asia-Pacific, told a news conference in Bangkok yesterday.
"We're very excited about the opportunity and we also believe that the time to act is now," Saluja said.
He said Thai commercial banks should change their strategy of being takeover targets for banks from Singapore and Malaysia or other countries; they should instead look for opportunities to take over other banks in the region.
As Thailand has a geographic advantage by sharing borders with many countries in the region, this opens the opportunity for its banks to finance increasing trade and investment flows within Asean, he said.
Thai banks so far have undertaken fewer investment and corporate banking activities in the region than their peers. Their net revenue from international banking is smaller than peers' in Singapore and Malaysia, Saluja said.
For example, between 2007 and 2011, Thai banks' international revenue was less than 5 per cent of group revenue, compared with more than 40 per cent of total revenue earned by Singaporean or Malaysian banks, according to research conducted by Accenture, a global consulting, technology-services and outsourcing company.
Singaporean and Malaysian banks have the first-mover advantage of becoming the top Asean franchise by 2015 whereas Thai banks are still focused mostly on the home market, he said.
Thai banks are also smaller than peers in Singapore and Malaysia. The top five Asean banks in terms of capital are three in Singapore and two in Malaysia.
Last year, DBS Bank had total capital worth US$26.29 billion (Bt781.4 billion), followed by Oversea-Chinese Banking Corporation with capital of $20.18 billion and United Overseas Bank with $18.40 billion; all three banks are based in Singapore. In Malaysia, Malayan Banking had capital worth of $10.52 billion and CIMB $8.78 billion. The two largest Thai banks were Bangkok Bank, having $8.02 billion, and Siam Commercial Bank with $6.14 billion.
"Thai banks are smaller but they have capacity to raise more capital," said Saluja in response to a question on adequate capital for expansion into Asean countries.
Some Thai banks have started to open representative offices and branches in Asean countries. Richard Lumb, Accenture's group chief executive for financial services, said it was the right move.
He was also optimistic that Bangkok could become a financial centre in the next few years if authorities put in place an appropriate regulatory environment and local banks make the right responses to the changing environment as Western banks have retreated from the region because of problems at home.
However, both advisers warned that a threat for Thai banks could come from tough competition by other Asean banks as well as those from China, Japan and Australia.