Tisco Bank and its sister firm All-Ways Company have acquired the retail banking business of Standard Chartered Bank Thai (SCBT) in a deal worth 5.5 billion baht. The move is geared towards improving market positioning and product coverage.
The net asset value of SCBT's retail banking business as of September amounted to 5.5 billion baht, comprising total assets of 41.6 billion baht and total liabilities of 36.1 billion, Tisco Financial Group, the parent company of Tisco Bank and All-Ways Company, said Thursday in a filing with the Stock Exchange of Thailand.
Standard Chartered Bank has been in Thailand since 1894 when the Chartered Bank of India, Australia and China first established a branch in Bangkok.
"It's very tough to survive in Thailand's retail-banking business for small players with very fierce competition," Isara Ordeedolchest, an analyst at SCB Securities Co. in Bangkok, said by phone. "The outlook for banks should improve significantly in 2017 as a consumption recovery and higher government spending will spur economic growth."
The Asia-focused Standard Chartered is targeting a turnaround after last year posting its first annual pretax loss since 1989. In a sign that the Thai operations were not a bright spot, the bank in February recorded a $126 million goodwill impairment on its business in the country.
Under the agreement, SCBT's retail banking business includes credit cards, personal loans, business loans, wealth management, mortgage loans, bancassurance and retail deposits.
Some 7 billion baht in personal loans, 5 billion in business loans, 25 billion in mortgages, six branches of SCBT, 300,000 retail customers and another 100,000 affluent clients will be transferred to Tisco Bank, while 4 billion baht worth of credit card business will be shifted to All-Ways Company.
"The transfer to Tisco will happen in 2017, subject to regulatory approvals," Tisco said. "SCBT and Tisco will work together closely to ensure a smooth transition for affected retail banking clients."
Asia-focused British bank Standard Chartered is scaling back businesses that do not make a profit or lack competitive advantages after being hit by a prolonged downturn in emerging markets. After the acquisition, SCBT will continue operating corporate and institutional banking and commercial banking businesses.
For Tisco, the acquisition will help it expand its presence in the retail banking business.
"The transaction aligns well with Tisco's strategic position and business aspirations," the group said. "Tisco will strengthen its retail banking business franchise with a substantially expanded customer base, more complete product lines and increased retail distribution channels."
As credit cards will be a new business for Tisco, SCBT will help it manage the business for one year, said Oranuch Apisaksirikul, who chairs the Tisco executive board. All-Ways will be renamed Tisco Card Service later in the process, she said.
Hundreds of SCBT employees will be transferred to Tisco's group.
Mrs Oranuch said the retail banking business has the potential to grow rapidly as Thailand becomes an ageing society in which the elderly have high purchasing power.
The Tisco group's loan portfolio will jump by 15% next year after the completion of the asset transfer, she said. Tisco Bank has 57 branches nationwide.
Mrs Oranuch said Tisco's hire-purchase business, constituting the largest portion -- 60% -- of the loan portfolio, is expected to deliver flat growth in 2017, though auto sales are forecast to reach 800,000 units.
Kavee Chukitkasem, assistant managing director of Kasikorn Securities, said the acquisition of retail banking will be a challenge for Tisco because competition has intensified and the field requires high capital expenditure to handle the large number of customers.
TISCO shares closed Thursday on the SET at 58 baht, up 1.25 baht, in trade worth 747 million.