Kasikornbank (KBank) wants to expand its footprint in Myanmar, acquiring a sizeable stake in a bank there.
If the acquisition deal goes through, it will mark the second purchase of a stake in an overseas financial institution by a Thai bank in two months, after Bangkok Bank's acquisition of Indonesia's PT Bank Permata worth US$2.7 billion (81.3 billion baht).
KBank is studying a suitable business model in Myanmar after the Central Bank of Myanmar (CBM) opened to more business opportunities for foreign banks, said co-president Kattiya Indaravijaya.
Foreign banks are allowed three licence types in Myanmar: establishment of a commercial bank as a subsidiary, a foreign bank branch and application for equity participation with a local bank.
"After news reports of our interest, the CBM is considering a stake sale," Ms Kattiya said. "KBank is considering negotiation of investment models to finalise an appropriate structure there. This will depend on approval by the CBM and the Bank of Thailand concerning the business licence type."
According to the Myanmar Times, KBank is looking to buy a 35% stake in Ayeyarwaddy Farmers Development Bank (A Bank). The CBM has allowed foreign banks to hold stakes in local banks since January 2019.
Incorporated in 2014, A Bank has assets of 314 billion kyat (6.4 billion baht) and registered capital of 40 billion kyat.
Ms Kattiya said A Bank has high-growth potential and a positive outlook in accordance with Myanmar's economy. With a wide business portfolio, including small and medium-sized enterprise, retail and insurance concerns, it would facilitate KBank's business expansion in the market.
KBank has overseas networks in nine countries: Cambodia, Laos, Myanmar and Vietnam (CLMV), plus Indonesia, China, Japan, the US and the Cayman Islands.
Finansia Syrus Securities analyst Sunanta Vasapinyokul said KBank's share purchase of A Bank initially will not affect KBank's financial structure, since the investment is not a consolidation, unlike Bangkok Bank's acquisition of Indonesia's PT Bank Permata.
A Bank's assets worth 314 billion kyat would make up 0.02% of KBank's assets valued at 3.2 trillion baht, Ms Sunanta said.
"This could be deemed KBank's first step into the banking industry in one of the CLMV countries," she said.
KBank shares closed yesterday on the Stock Exchange of Thailand at 133 baht, down three baht, in trade worth 2.39 billion baht.