KDB May Bid for Siam City Bank
By Cho Jin-seo
Staff Reporter
The Korea Development Bank (KDB) is expected to make a bid for Siam City Bank (SCIB), the seventh-largest commercial bank in Thailand, as part of its long-term roadmap to transform into Asia's leading bank.
The move, which is expected to cost over $1 billion, is in line with the KDB's expansion plan in Southeast Asia. The bank is also doing feasibility studies on several other M&A targets in Thailand and other East Asian countries.
``We are one of several potential bidders shortlisted for the SCIB. But we have yet to make a final decision on whether to submit a final bid,'' said a representative at its international affairs department, refusing to be named.
The lender said the final decision will be made once its chief Min Euoo-sung comes back from his trip to Thailand. He left for the country Sunday to meet with Thai financial regulators to discuss the deal. He is scheduled to return Wednesday.
SCIB is one of 14 commercial banks in Thailand and was nationalized in 1998. The Thai government plans to sell a block of 47.6 percent of shares plus managerial rights in the first half of this year.
If the KDB is picked as a successful bidder, it is required to make a general offer for the remaining shares under Thai securities regulations ― under these, a successful bidder should make an offer for the remaining shares when its stake exceeds 25 percent.
The list of bidders includes HSBC of the United Kingdom, the Bank of Nova Scotia of Canada, and Hong Leong Bank of Malaysia, according to a Bloomberg report last month.
As foreign banks have show interest one by one since last year, SCIB's share price has soared accordingly. It has risen by 312.2 percent over the past 12 months, far outperforming the 58-percent rise of the Thai stock index last year.
Now the total market valuation of firm's shares amounts to 59 billion Thai Baht, equivalent to $1.79 billion at Monday's exchange rate. The block on sale is worth around $850 million at that price, which will probably be boosted by a premium to make the final sale price over $1 billion.
The KDB is trying to turn itself from a state-controlled lender into a global bank with strong presence in investment banking and retail banking. While searching for opportunities for domestic mergers and acquisitions with, Min has also been searching for opportunities for international expansion, especially in Southeast Asia, the bank representative said.
Min's boldness has not always met with enthusiasm in the finance circle. The former chief of Lehman Brothers in Korea had wanted the KDB to acquire part of his former employer in the summer of 2008.
The firm declared Chapter 11 bankruptcy only a few days after the Korean financial authorities labeled the attempt as imprudent and rejected it.
KDB's assets reached 156 trillion won ($138 billion) as of September 2009, according to its latest financial report.