Business

Thursday October 1, 2009

ICBC to take up stake in Thailand’s ICL Bank


Deal will help China lender gain foothold in South-East Asia

HONG KONG: Industrial and Commercial Bank of China (ICBC), the world’s largest bank by market value, plans to buy Thailand’s ACL Bank for about US$545mil, helping it expand its footprint in South-East Asia.

The deal, which represents ICBC’s first acquisition in Thailand, is one of a handful of overseas purchases by the bank in the last few years.

“Compared with Western countries, it’s relatively easier for Chinese banks to operate in South-East Asia, where there are many ethnic Chinese,” said Jin Lin, analyst at Orient Securities Co.

“Chinese banks would also benefit from booming trade in the region, as well as China’s efforts to regionalise its currency, the yuan.”

ICBC had agreed to buy a 19.26% stake in ACL Bank from Bangkok Bank for 3.52 billion baht (US$105mil), and also planned to make an offer for ACL’s remaining shares, it said in a statement late on Tuesday.

ICBC will buy shares in Thailand’s smallest lender for 11.5 baht each, 15% higher than ACL’s Tuesday closing price of 10 baht, valuing ICBC’s entire stake bid for ACL at 18.29 billion baht (US$545mil).

“Thailand, which has a significant economic and geographical advantage, will serve as a platform for the bank to enter into the Mekong River region,” ICBC said.

Earlier this month, ICBC vice-president Yi Huiman said emerging markets in Asia would be its first choice for international mergers and acquisitions.

The acquisition would also have important strategic value for the bank to expand its overseas institutional and operational network in South-East Asia, ICBC said.

ICBC and other Chinese banks are increasing overseas acquisitions at a time when many Western banks such as Citigroup Inc have scaled back expansion due to the financial crisis.

ICBC said the general offer for ACL Bank was conditional on regulatory and shareholder approvals and on ICBC having acquired 51% or more of all issued ACL shares.

“It’s a tiny deal, but important strategically,” analyst Jin said, adding that ICBC could make enough profit each year to buy 10 such banks.

The Thai Ministry of Finance, the largest shareholder of ACL with 30.6% of the bank, said on Tuesday it was ready to sell its ACL stake to ICBC.

That stake, combined with Bangkok Bank’s 19.26%, would give ICBC a combined stake of 49.86% of ACL.

ACL had total assets of about 63.7 billion baht, it said.

If and when the offer is made, ICBC will decide whether to also pursue the delisting of ACL shares from the stock exchange of Thailand. — Reuters


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