May 5--Thanachart Capital may seek a shareholding in Siam City Bank as part of its growth strategy, said TCAP chairman Banterng Tantivit.

TCAP is a holding company with a majority stake in Thanachart Bank, which also has Canada's ScotiaBank as a 49 percent shareholder.

The central bank's Financial Institutions Development Fund is expected to eventually sell its 47.58 percent stake in Siam City Bank, Thailand's seventh-largest bank with assets of 415 billion at the end of March.

A merger with Thanachart Bank, ranked eighth with assets of 352 billion baht, would create the country's fifth-largest institution, behind Bangkok Bank, Krung Thai, Kasikornbank and Siam Commercial Bank.

Mr Banterng said ScotiaBank's commitment and Thanachart Bank's capital is enough to finance any acquisition without new funding.

"[An acquisition] would help TBANK grow faster and generate economies of scale. Asset size is critical for the banking business as negotiating power improves, which in turn leads to higher profitability," he said.

Mr Banterng said a TBANK-SCIB combination would offer considerable synergies, with TBANK's retail banking franchise matching up well with SCIB's corporate banking strengths and branch infrastructure.

TBANK operates some 200 branches nationwide, compared with 400 for SCIB.

TCAP already owns nearly 9 percent of SCIB, with 4.97 percent held directly and TCAP major shareholder MBK holding another 3.82 percent.

Mr Banterng said TCAP's shareholding in SCIB was based on its favourable shareholding prospects.

SCIB's current share price of about 10 baht compares favourably against its book value of 19 baht per share and its dividend of 0.7 baht per share last year, he said.

Mr Banterng added that if TCAP was unsuccessful in raising its shareholding in SCIB and another entity purchased the FIDF's shareholding, the group would also divest its holdings.

Shares of SCIB closed yesterday on the Stock Exchange of Thailand at 10.2 baht, up 25 satang, in trade worth 53 million. TCAP shares closed at 11.7 baht, up 50 satang, in trade worth 49 million.

-----

To see more of the Bangkok Post, or to subscribe to the newspaper, go to http://www.bangkokpost.com.

Copyright (c) 2009, Bangkok Post, Thailand

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

NBANK, SCIB,

A service of YellowBrix, Inc.