Scotiabank offers 4 Asian banks its $1.7bn Thanachart stake

Scotiabank offers 4 Asian banks its $1.7bn Thanachart stake

Bank of China, 2 Japanese lenders likely bidders in 2Q sale

Canada’s Scotiabank plans to sell its 49% share in Thanachart Bank, Thailand’s biggest automobile lender. (Photo by Pongpat Wongyala)
Canada’s Scotiabank plans to sell its 49% share in Thanachart Bank, Thailand’s biggest automobile lender. (Photo by Pongpat Wongyala)

SINGAPORE/HONG KONG -- Canada's Bank of Nova Scotia has approached a unit of Bank of China, Maybank and two Japanese banks to gauge their interest in its US$1.7 billion stake in Thanachart Bank, people familiar with the matter said.

Bank of Nova Scotia, known as Scotiabank, has hired Morgan Stanley to advise it on the sale of the 49% stake, the sources said. First-round bids for the sale are expected in the second quarter, one of the people added.

If the sale goes through, it would be the biggest bank deal in Thailand after Japan's Mitsubishi UFJ Financial Group bought a controlling stake in Bank of Ayudhya Plc for up to $5.6 billion three years ago.

Scotiabank is the latest mid-sized Western bank in Asia to rethink its strategy in the face of headwinds from low growth in China, depressed commodity prices and falling interest rates.

The Canadian lender had flagged it was reviewing its Thanachart stake in December. One of the sources said it wants to exit its retail presence in Asia and focus mainly on corporate banking in the region through a few key offices.

Thanachart Capital Plc owns the remaining 51% stake in Thanachart.

"This is a fairly sizeable ticket and if they were to sell it close to where previous transactions have happened -- two times book value -- the Chinese look to be the only ones who have the capacity," said a banker familiar with the sale process who declined to be named as the matter remained confidential.

Bank of China's unit BoC Hong Kong is showing interest in the stake, one of the sources said. The bank has said it was keen to expand outside China.

Morgan Stanley has also approached Taiwan's Fubon Financial Holdings, Japan's Mizuho Financial Group and Sumitomo Mitsui Banking Corp, a unit of Sumitomo Mitsui Financial Group, the sources added.

Asked about the deal, Scotiabank spokesman Marcelo Gomez-Wiuckstern said: "No final decision has been made with respect to this investment."

Thanachart Bank declined to comment and the sources declined to be identified as the details of the deal remained confidential. Morgan Stanley did not respond to requests for comment, while the two Japanese banks, BoC Hong Kong, Maybank and Fubon all declined to comment.

Canada's most international bank spent C$510 million to build its stake in the unlisted Thai bank over the past eight years, but investors have recently raised concerns over its exposure to emerging markets, putting its stock under pressure.

Growth in Thanachart Bank's loan books has slowed since late 2013, hit by weak auto sales.


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