Thai c.bank unit examining bids for Siam City Bank

BANGKOK Feb 4 (Reuters) - An arm of Thailand's central bank was due to meet on Thursday to look at bids for a stake valued at over $900 million in Thailand's Siam City Bank (SCIB) SCIB.BK, amid talk HSBC Holdings (HSBA.L) may have quit the race.

Korea Development Bank pulled out on Monday [ID:nTOE61008U] and local lender Thanachart Bank, 49 percent owned by Canada's Bank of Nova Scotia (BNS.TO), is seen as the frontrunner for the 47.58 percent stake in the country's seventh-biggest lender.

"We have to submit the bidding process and terms to our board and seek approval on how I can negotiate," said Tongurai Limpiti, Bank of Thailand assistant governor in charge of the Financial Institutions Development Fund (FIDF), owner of the SCIB stake.

A sale was expected to go through in March, as planned, she said.

Asked if there was only one bidder left, which some analysts thought could lead to the cancellation of the auction, Tongurai said: "Don't listen to news reports."

An announcement of some sort is expected on Thursday evening, but financial sources close to the deal said the FIDF may want more time to negotiate with the frontrunner about terms and prices before the winner is finally named.

Thanachart Bank, also owned 51 percent by Thanachart Capital TCAP.BK, had been expected to bid around 30 baht a share, or 1.5 times SCIB's book value of 20 baht per share at end-December.

That compares with the 1.5-1.6 times book value ING (ING.AS) paid for 30 percent of Thailand's sixth-largest lender, TMB Bank TMB.BK, in November 2007, and the 2.3 times that Malaysia's CIMB paid for a stake in CIMB Thai Bank CIMBT.BK in June 2008.

At 0812 GMT, shares in SCIB were flat at 29.50 baht and Thanachart Capital was unchanged at 21 baht. The overall market was down 0.6 percent.

SCIB, founded in 1941 by the Thai government and the royal family, focuses on small and medium-sized businesses and operates 420 branches nationwide with 7,047 employees.

Scotiabank is keen to merge SCIB with Thanachart Bank, Thailand's leading provider of car loans, to form what would be the country's fifth-biggest bank with $23 billion in assets.

The FIDF is the central bank's rescue arm, set up after several financial firms collapsed in the 1997-98 Asian financial crisis. It is advised by UBS (UBSN.VX) and Tisco Securities TISCO.BK. ($1=33.13 Baht) (Reporting by Boontiwa Wichakul; Writing by Khettiya Jittapong; Editing by Alan Raybould)