Scotiabank ‘May Consider Strategic Options’ for Thai Bank Stake

23 Dec 2015 | Author: | No comments yet »

Scotiabank eyes options for stake in Thai bank.

On Thursday, Bloomberg News reported that Scotiabank was gauging interest in its stake in Thanachart Bank Public Co., citing people familiar with the matter. “As part of a strategic shift in the direction of Scotiabank’s Asia Pacific operations, led by the realignment of regional operations under the Global Banking and Markets business line, Scotiabank may consider strategic options for its 49% stake in Thanachart Bank,” Scotiabank said in a news release Friday. The Toronto-based lender’s review of its 49-per-cent holding could result in a partial or complete exit of the investment, the people said, asking not to be identified as the process is private. The Thanachart Bank stake has a carrying value of C$2.4 billion (62.7 billion baht) on Scotiabank’s balance sheet, according to its latest annual report.

However, Scotiabank has been more focused on Latin America under the leadership of chief executive officer Brian Porter, who has expressed considerable interest in the Pacific Alliance trading bloc of Chile, Colombia, Mexico and Peru, markets prized for their relative economic and political stability. Scotiabank, Canada’s most international bank with operations in 55 countries, has been prioritizing expansion in Latin America over Asia, where it is hampered by ownership restrictions. In its statement on Friday, the bank said that continues to maintain a good working partnership with Thanachart Capital Public Company Limited, or TCap, which owns the other 51 per cent of Thanachart. “TCap is aware of Scotiabank’s consideration of strategic options and is open to considering proposals that are also in the interest of TCap and TBank’s customers, employees, shareholders and regulators,” Scotiabank said. Moody’s Investors Service last month put the lender’s rating on review for a downgrade, citing its series of acquisitions in “higher-growth but less stable international markets.” “For an international bank considering Thailand, they would have to look at Thanachart Bank because of its large network,” Weerapat Wonkurai, a Bangkok-based analyst at CIMB Securities Thailand Co., said by phone Thursday. “Management vision and strategy at the bank is needed to create more franchise value.” A formal sale process could start early next year if Scotiabank decides to proceed with a divestment, according to two of the people.

Mitsubishi UFJ Financial Group Inc. acquired control of Bank of Ayudhya PCL for $5.5-billion (U.S.) in 2013, valuing the target at about two times book value, according to data compiled by Bloomberg.

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