To fork out Bt68-bn; move will make it 5th largest bank
Thanachart Bank is expected to spend Bt68 billion on buying Siam City Bank after striking a deal with the Financial Institutions Development Fund (FIDF) yesterday, in a move that would make it the country's fifth-largest bank by asset value.
Thanachart, backed by the Canada-based Bank of Nova Scotia, inked a deal for buying a 47.68-per-cent stake in the country's smallest bank from the FIDF at Bt32.50 a share for Bt32 billion.
The bank was one among five bidders for Siam City Bank (SCIB) in the final round, from 45 bidders in the first round.
"We didn't only focus on the price, but also on the business proposal. Thanachart Bank, being backed by the Bank of Nova Scotia, one of the largest banks in North America, should have the potential to grow the bank," said FIDF manager Thong-urai Limpiti.
After merging, Thanachart will become the fifth-largest bank by assets, totalling Bt800 billion, with 600 branches and 14,251 employees.
Meanwhile, brokers recommended a "buy" rating on Thanachart Capital, which holds 50.92 per cent of Thanachart Bank's paid-up capital. The merger deal would strengthen Thanachart Bank's financial status and banking business in the next few years, they said.
Thanachart Bank will seek the approval of shareholders at a meeting on April 8 for buying the SCIB shares. The transaction is then due to be executed with the FIDF on April 9, said Thanachart Bank chairman Banterng Tantivit.
He said the bank would also make a tender offer to buy SCIB shares from its general investors, in conformation with the Securities and Exchange Commission's rules and regulations on holding more than 25 per cent of a listed company' capital. The tender offer is expected to be completed in July.
"Funds raised to buy SCIB will come from Thanachart Bank's mandate for increased share capital of Bt42 billion, plus subordinated debentures' issuance," said Banterng.
After the transaction goes through, he said SCIB's assets and liabilities would be transferred to Thanachart Bank, while its licence would be returned to the Bank of Thailand.
Various options will be considered for other investments of SCIB in securities, insurance and leasing businesses. He said they may either be transferred to the corresponding subsidiaries of Thanachart Bank or partners may be sought to buy some of the stakes.
SCIB shares yesterday closed 1.64 per cent higher at Bt31 each. Thanachart Capital stock closed at Bt21.20, up 2.42 per cent on the day.
