Foreign banks: Larger role in Thailand

Foreign banks: Larger role in Thailand

First time over 49% foreign ownership allowed for buying Thai bank not having financial problems.


Fitch: Foreign banks to take larger role following BAY deal


Thailand's banking industry is seeing the growing presence of foreign banks, particularly those from Asia-Pacific, says Fitch Rating following Bank of Tokyo-Mitsubishi UFJ's (BTMU) proposed takeover of Bank of Ayudhya (BAY).

If successful, the acquisition would increase foreign banks' share in total commercial bank assets in Thailand to 26% from 18%. BAY would become the largest foreign-owned bank in Thailand, as the fifth-largest commercial bank here.

It would also mark the first time the 49% foreign ownership limit is waived for an acquisition not related to financial rehabilitation of the acquired bank or liquidation of bank shares owned by the government.

BAY is a profitable bank and the share purchase will be from private shareholders.

Fitch believes this lenient attitude may be because Japan is the largest foreign direct investor in Thailand, contributing 30-40% of total FDI each year from the period 2001 to 2012.

The Bank of Thailand recently announced it will issue up to five foreign commercial bank subsidiary licences, which allow up to 20 branches and 20 ATMs. This will provide for a wider scope of activity than previous branch licences, but still falls short of a full banking licence. Fitch expects potential applicants to be Asian banks that are new entrants to Thailand.

In 2011 the central bank allowed existing foreign bank branches to increase their subsidiaries in Thailand up to 20 branches and ATMs. However, no foreign branches have been upgraded.

Most foreign-owned banks in Thailand are owned by Asian banks as part of their regional expansion strategies ahead of the upcoming Asean integration.

Fitch does not believe the acquisition of BAY will affect Thailand's four largest banks in the short to medium term. BAY is the leader in retail lending, particularly in auto-hire purchases and credit cards. Its wholesale segment may benefit from BTMU's relationships with Japanese borrowers, but lending to Japanese is not a large part of the Thai bank's loan portfolio.

Foreign-owned banks could be more competitive than Thai banks in intra-regional businesses, where leading Thai banks have yet to establish a meaningful presence, said Fitch. Bangkok Bank has more regional networks than its major Thai peers, as others pursue gradual strategies, mainly supporting Thai clients' business overseas and focusing on the Greater Mekong Subregion or China.

There are 15 commercial banks in Thailand. Four of them are foreign-owned banks with the foreign ownership limit waived above 49% when they acquired Thai banks.

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  • (market) segment: a particular part of a market for a product - ส่วนตลาด
  • acquire: to get; to obtain - ได้มาซึ่ง
  • acquisition: the process of buying something; something that has been bought - การซื้อ, การได้มาซึ่งการเข้าถือสิทธิ์
  • announce: to tell people something officially, especially about a decision, plans, etc - ประกาศ, แจ้ง, แจ้งให้ทราบ
  • applicant: someone who applies for something, such as a job or a loan of money - ผู้สมัคร,ผู้แจ้งความจำนง,ผู้ขอ
  • assets: things owned by a person, company etc., particularly money and property - ทรัพย์สิน
  • attitude: someone’s opinions or feelings about something, especially as shown by their behaviour - ทัศนคติ, ลักษณะท่าทาง
  • benefit: to get help or an advantage from something - ผลประโยชน์
  • borrower: a person who takes money from a person or bank and agrees to pay it back to them at a later time - ผู้ขอยืม
  • branch: an office or shop representing a large company or organisation in a particular area - สาขา
  • central bank (noun): the main government bank in a country that controls the supply of loans (credit) and the supply of money in the country and provides financial services to the government and other banks - ธนาคารแห่งชาติ
  • commercial bank (noun): a bank with branches in many different places, that provides a range of services, especially related to bank accounts, loans and saving money, for people and businesses; the kind of bank that most people use - ธนาคารพาณิชย์, สถาบันการเงินที่มุ่งเน้นการรับฝากเงิน
  • competitive: involving competition - มีการแข่งขัน
  • contribute: to be a part of a group or an activity and help it to be successful - สนับสนุน
  • entrant: a person who enters a race or a competition; a person that enters an exam - ผู้เข้าร่วมการแข่งขัน
  • establish (verb): to start something, e.g. a company, organisation, fund, project, etc. that will likely continue for a long time - สถาปนา, ก่อตั้ง, จัดตั้ง
  • existing (adj): present now; in use now; used now - ที่มีอยู่
  • expansion: when something increases in size, number or importance - การขยายออก
  • FDI (noun): Foreign Direct Investment, money that people or companies of one country invest in another country by buying property, building factories, buying businesses, etc -
  • financial: involving money - เกี่ยวกับเงิน, ทางการเงิน
  • focus: to give attention, effort, etc. to one particular subject, situation or person rather than another - เพ่งความสนใจ
  • foreign direct investment (noun): FDI, money that people or companies of one country invest in another country by buying property, building factories, buying businesses, etc -
  • gradual (adjective): slowly and in small stages or amounts - อย่างทีละน้อย
  • hire purchase (noun): a way of paying for goods gradually over a long period. You have the goods immediately, but legally you do not own them until you have finished paying - ให้เช่าซื้อ
  • integration: the process of combining with others to create a single unit or system - การรวมเข้าด้วยกัน, การผสมผสาน
  • intra (adjective): within, inside - ภายใน
  • investor: a person or organization that invests money, i.e., uses money with the aim of making a profit from it, for example by buying property or buying shares in a company - นักลงทุน
  • issue: to officially give out - ออก
  • leading (adjective): among the first and most important in a group - ชั้นหนึ่ง, ชั้นแนวหน้า, ชั้นนำ
  • lend (verb): (past form: lent) to give money to someone who agrees to pay it back in the future - ให้ยืม
  • lenient: not strict; not giving someone as strong a punishment as you could - ลงโทษสถานเบา หรือให้ความเมตตา
  • licence: an official document that gives someone permission to do or use something - ใบอนุญาต
  • limit: the greatest or smallest amount of something that is allowed - ขีดจำกัด
  • liquidation (noun): selling assets to get cash - การเปลี่ยนให้เป็นเงินสด
  • mark: a level or point that something reaches that is thought to be important - ความสำคัญ
  • network: a large system of connected parts, organisations, people, etc. - เครือข่าย
  • overseas: in another country - ต่างประเทศ
  • particularly: especially, or more than usual - โดยเฉพาะ
  • peers: people who are the same age or have the same social position or the same abilities as other people in a group - เพื่อน
  • portfolio (noun): a set of investments owned by a company, person or organization - หลักทรัพย์การลงทุน, หลักทรัพย์ในครอบครอง, กลุ่มหลักทรัพย์; หลักทรัพย์ทั้งหมด ในความครอบครองของ ผู้ลงทุนรายใดรายหนึ่ง
  • potential: possible in the future - ที่อาจเป็นไปได้
  • presence: the fact of being in a particular place, thing or situation - การเข้าร่วม, การมีอยู่
  • previous: happening or existing before the event or object that you are talking about - แต่ก่อน, เมื่อก่อน
  • private: involving groups, businesses or industries that are not owned or controlled by the government - เอกชน
  • profitable: able to earn money and expenses are subtracted - ให้ผลกำไร,ได้ผลประโยชน์
  • proposed: suggested as an idea for a group to consider - ถูกเสนอ
  • purchase: to buy something - ซื้อ
  • pursue: to work at something or carry it out - ทำให้ลุล่วง
  • recently (adverb): not long ago - เมื่อไม่นานมานี้, เมื่อเร็วๆ นี้
  • regional: of or relating to a region - เกี่ยวกับภูมิภาค
  • rehabilitation: making a system, building, etc., suitable for use again, i.e., bringing it back to a good condition - การฟื้นฟูสภาพกิจการ
  • relationship: the way in which two people, groups or countries behave towards each other or deal with each other - ความสัมพันธ์
  • retail: to sell directly to the public for their own use - ขายปลีก
  • role: the position or purpose that someone or something has in a situation, organisation, society or relationship - บทบาท
  • scope (noun): the things that a particular activity, organisation, subject, etc deals with - ขอบเขต
  • share: any of the units of equal value into which a company is divided and sold to raise money. People who own shares receive part of the company's profits - หุ้น
  • share: one part of something that is divided between two or more people - ส่วน
  • shareholder: a person who owns some of the equal parts into which the ownership of a company is divided - ผู้ถือหุ้น
  • strategy: a plan or method for achieving something, especially over a long period of time - ยุทธวิธี, แผนการ  
  • sub (adjective): one small part of a larger thing - ด้านใน, ใต้, ด้านล่าง
  • subsidiary: (of a business company) owned or controlled by another company - บริษัทในเครือ
  • successful (adjective): achieved the goals you wanted to achieve or made a lot of money - มีผลสำเร็จ, ประสบผลสำเร็จ, ประสบชัยชนะ
  • takeover (noun): an act of taking control of a country, company, organisation, etc. - การครอบครอง
  • total: to add up the numbers of something/somebody and get a total - ผลรวม, ยอดรวม
  • upcoming: happening soon; available soon - ซึ่งกำลังจะเกิดขึ้น, ซึ่งกำลังจะมา
  • upgrade: to make a project, a piece of machinery, computer system, etc. more powerful and efficient - ยกระดับ
  • waive: to officially ignore a rule, right, or claim - ปลด
  • wholesale: relating to the business of selling large quantities of goods, especially to people who are going to sell them in a shop - ขายส่ง
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