Top Thai banks seek increasing role in China

Economy April 08, 2013 00:00

By Sucheera Pinijparakarn
The Na

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Major Thai banks are enthusiastic about the business opportunities in China, especially in the south, where there is potential to serve both Thai and Chinese enterprises.



 

Southern China is also close to the Greater Mekong Subregion, which comprises Thailand, Laos, Myanmar, Cambodia, Vietnam and China’s Yunnan province.
Bangkok Bank is the only Thai commercial bank that has had a significant presence in China for more than 20 years and has been granted a local bank licence. It has four branches, in Shanghai, Beijing, Xiamen and Shenzhen.
Krungthai Bank operates in Kunming, capital of Yunnan province.
Kasikornbank is building its track record in China, and expects to need up to five years to prove that it can upgrade to a local bank over there, said Banthoon Lamsam, chief executive officer and chairman of the board.
KBank gained an exposure in China five years ago by collaborating with China Minsheng Banking Corporation to open KBank’s first branch in Shenzhen.
Banthoon said the bank had studied China for a decade to ensure a firm foothold there, adding that China had a crucial role in the global economy. Its large population and the small and medium-sized enterprises there provide an opportunity for KBank.
He said that to ensure a firm foothold, KBank must have more branches so it can seek a local-bank licence.
KBank will open a second branch in Chengdu next month. It plans to open additional branches in the south or west of China, Banthoon said.
The second branch in Chengdu is still a collaboration with a Chinese partner.
He said KBank had seen impressive outstanding loans and profits from the first branch in Shenzhen, which it captured from SME lending and mobilising funds for commercial customers.
He said the key to success of overseas branches was human resources, so KBank must have a complete staff to work in China.
“We will not open branches in Beijing or Shanghai because those cities are beyond our ability. The capital requirement for a branch is around Bt1 billion, so the [decision to] open more branches will be based on cost,” he said.
The bank expects to have three branches in China within five years if it meets no obstacles, and that number of branches could demonstrate to the authorities that KBank is ready to be licensed as a local bank.
Siam Commercial Bank aims to open a representative office in Beijing this year if the Chinese government grants approval, said SCB president Kanikar Chalitaporn.
She said that as the capital of China, Beijing was seen as the economic centre where SCB must start its network even though the cost is high.
“After having a representative office, we will make plans to upgrade to a branch,” she said.
Vichit Suraphongchai, chairman of the SCB’s executive committee, said the representative office would facilitate transactions by Thai businesses that have exposure in China, such as the energy drink Krathing Daeng, and Chinese companies investing in Thailand.
Vichit also said the bank was conducting a feasibility to increase its stake in Vinasiam Bank in Vietnam. SCB currently holds around 33 per cent in that joint venture, the state-owned Vietnam Bank for Agriculture and Rural Development (Agribank) holds 34 per cent and Charoen Pokphand Group holds 33 per cent.
However, SCB will discuss the plan with Agribank again, noting that the economy in Vietnam has improved after learning from the failures in the past few years.