Thanachart Capital to Cooperate as Scotiabank Weighs Thai Sale

23 Dec 2015 | Author: | No comments yet »

Scotiabank eyes options for stake in Thai bank.

Bank of Nova Scotia’s Thai partner Thanachart Capital Pcl said it “will cooperate fully” if the Canadian lender decides to sell its stake in the Bangkok-based bank. That cooperation is based on the understanding that the Toronto-based lender will offer its holding to “large, financially strong and reputable international financial institutions acceptable to Thanachart Capital with approval from the Bank of Thailand,” the firm said in a Thai exchange filing. It said Thanachart Capital Public Co., which owns the other 51% of the Thai bank, was aware that Scotiabank might consider strategic options for its investment.

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. 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. 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. 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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