SCB sees big gain in border provinces

Siam Commercial Bank foresees high fee-based income from medium-sized companies that are seriously looking for opportunities in border provinces and Asean countries.

Sarat Ratanaporn, first executive vice president of SCB for commercial banking, said it had acknowledged that major Thai cities near the borders would benefit from the Asean Economic Community. Therefore, it has set up regional hubs in such cities to cover the requirements of local companies, as well as Bangkok-based firms that are planning to expand to cash in on urbanisation and the AEC.

The electronics sector is a clear example of the expansion into Asean countries. Medium-sized companies in this sector are looking at the CLMV countries (Cambodia, Laos, Myanmar and Vietnam) rather than the countries in the south or the region.

Thai companies that expand into Asean have two reasons for doing so. Those setting up factories in CLMV countries want to reduce labour costs and secure resources. The other reason is market expansion, for which Malaysia and Indonesia have potential.

Apart from electronics, the agricultural and energy industries are also enlarging their investment in Asean.

Sarat said the activities of medium-sized companies in border provinces were largely in real estate and agriculture, which have not been affected by the global economic slowdown.

Local developers and major property firms in Bangkok are expanding residential projects upcountry, which could support both lending and fee-based income from transactions for SCB, he said.

The bank assists local and major developers in different ways. He noted that the big firms had sources of funding from the capital market, so the bank helped underwrite fund mobilisations such as debenture issues.

For local developers in the provinces, the bank helps analyse the total costs of projects and presale volumes before providing loans.

SCB sees an opportunity for increased fee-based income from financial advisory, transactions, trade finance, foreign exchange and project finance.

"Fee-based income from medium-sized companies, what we call commercial banking, this year is expected to increase to 40 per cent from 35 per cent last year," he said.

At present, SCB’s commercial banking looks after 3,000 businesses with annual turnover between Bt500 million and Bt10 billion.