* Second round bids are due after Christmas
* Foreign ownership in Thai banks capped at 49 pct
* Bank of Ayudhya shares up 1.7 pct
By Taiga Uranaka and Saeed Azhar
Nov 29 Japan's biggest bank, Mitsubishi UFJ
Financial Group, is among the first round bidders for
General Electric's $1.5 billion stake in Thailand's
fifth-largest lender, Bank of Ayudhya, sources told
Reuters on Thursday.
Suitors of GE's Thai bank stake are seeking a foothold in
one of Asia's fastest growing economies. They are expected to
seek full control of the bank, which is also Thailand's No. 1
retail bank with a $5.9 billion market value.
In addition to MUFG, GE received multiple bids last week for
its 25.3 percent stake, with second round offers due after Dec.
25, according to sources with direct knowledge of the matter.
One source familiar with the process but not directly
involved said Malaysia's No.2 lender, CIMB Group Holdings
, had also lodged a bid.
Singapore's Oversea-Chinese Banking Corp, which
was earlier seen as a potential bidder, did not submit a
first-round bid, the sources said.
MUFG and CIMB declined to comment.
Any suitor seeking to take control of the bank would have to
overcome several hurdles, including a 49 percent cap on foreign
ownership and Thailand's single presence policy on bank
Some private equity firms were initially eyeing the stake,
but their interest has cooled, sources said, as regulators may
not favour short-term investors entering the country's banking
GE acquired a roughly 33 percent holding in Bank of Ayudhya
in 2007, for 22.3 billion baht, or $626 million based on the
exchange rate at the time. It recouped most of its investment,
when it sold a 7.6 percent stake in the Thai bank for $466
million in September.
GE, which has a market capitalisation of $221 billion, has
been selling non-core businesses under Chief Executive Jeff
Immelt, and the sale of the Thai bank stake is part of the
The suitors for GE's stake were asked to also present a
detailed proposal on how they plan to grow the bank's business,
one of the sources said.
The auction is the second major Southeast Asia banking deal
this year, after Singapore's DBS Group Holdings'
planned $7 billion takeover of Indonesia's Bank Danamon Tbk
Morgan Stanley, which is advising GE on the stake
sale, declined to comment.
OCBC declined comment. A Singapore-based GE Capital
spokesman also declined to comment. The sources declined to be
identified because the auction process is not public.
Bank of Ayudhya shares were up 1.7 percent to 30.25 baht.
FOREIGN OWNERSHIP CAP
Foreign banks are keen to consolidate their position in
Southeast Asia, where rapid economic growth is boosting credit
growth and demand for wealth management products.
But an outright purchase of a Southeast Asian bank is made
difficult by foreign ownership limits in place in several
In Thailand, for instance, foreigners are barred from owning
more than a 49 percent stake in domestic banks. However, Thai
regulators are open to making exceptions based on the merit of
individual cases and that is encouraging some foreign banks to
eye the GE stake.
The outcome of GE's sale process is being closely watched by
ING, which is also preparing to offload its 31 percent
stake in TMB Bank plc, which is worth about $786
Thai media speculated that Siam Commercial Bank,
Thailand's third-biggest lender, could be a bidder for Bank of
Ayudhya, but earlier this month SCB said it had not held any
merger negotiations with GE Capital on Bank of Ayudhya.
Under Thailand's single presence policy, a local bank cannot
hold a stake in another bank, which led to speculation that the
two banks could be merged.