* MUFG makes $5.9 bln bid for 75 pct stake in Bank of Ayudha
* Bid likely to win Thai regulatory approval; seen paving
way for others
* Ayudha purchase to make ING's sale of $1.1 bln stake in
TMB more attractive
* TMB Bank stake could attract bids from Malaysian, Japanese
and Australian banks
By Khettiya Jittapong and Denny Thomas
BANGKOK/HONG KONG, July 3 A $5.6 billion bid by
Japan's Mitsubishi UFJ Financial Group(MUFG) for a
majority stake in Thailand's Bank of Ayudhya Pcl may
pave the way for more foreign acquisitions of Thai banks as
regulatory restrictions ease.
Thailand's central bank wants to boost the competitiveness
of its banking sector to attract more foreign investment into
Southeast Asia's second-largest economy. For foreign lenders
keen to tap the region's booming economies, gaining control is
key to make their investments worthwhile.
MUFG's deal to buy up to 75 percent of the mid-sized Ayudhya
appears likely to win Thai regulatory approval, burnishing the
appeal of a $1.1 billion stake in TMB Bank Pcl that
Dutch financial services company ING Groep NV is
seeking to sell.
Potential buyers for ING's 31 percent stake in TMB have
previously shied away from pursuing the deal because they were
unsure about gaining control, financial sources said.
"The outlook of Thai banks is interesting given their strong
performance," said Adisorn Muangparnchon, an analyst at Phillip
Securities. Major Thai banks posted record net profit in the
latest January-March quarter due to strong loan growth of about
13 percent from a year earlier.
"For foreign banks, buying a stake in existing banks will be
a quicker way for them to enter the Thai market, rather than
applying a licence from the central bank," he added.
Under the current regulations, foreign banks can buy up to
25 percent of a Thai bank without central bank approval but that
changes if the stake rises to up to 49 percent. More than that
requires the approval of the finance ministry.
MUFG, Japan's largest bank, told a briefing on Tuesday it
believes Bangkok would "take a favourable view" of its deal to
buy the Ayudhua stake. It also said it was considering merging
its Thai operations with the domestic lender to comply with
Thailand's single presence policy on bank ownership.
Thailand's central bank said it had received notification of
MUFG's purchase of Ayudhya. Any Thai approval of the deal would
contrast with Indonesia's attempts to roll-back foreign
ownership of its banks.
Southeast Asia's largest economy was obliged to sell some of
its best lenders after the 1997-98 Asian financial crisis and is
now capping foreign ownership at 40 percent, a policy that has
complicated attempts by Singapore's DBS Group Holdings
to buy a controlling stake in PT Bank Danamon
"Given the fact that the largest banks in Thailand are still
in majority-Thai ownership, Thailand is more relaxed about
foreigners taking over some of the next-tier banks in terms of
size," said PK Basu, regional head of research and economics at
Maybank Kim Eng in Singapore.
"I think there will be more activity."
MUFG's acquisition of Ayudhya is expected to renew the
interest of Malaysia's two dominant banks - CIMB Group Holdings
Bhd and Malayan Banking Bhd - Japan's
Sumitomo Mitsui Financial Group and Australian lenders
in the TMB auction, banking sources said.
"It has become potentially easier for ING now," said one
Hong Kong-based M&A banker familiar with the process, adding
that the process might be more complicated because the Thai
finance ministry owns a 26.1 percent stake in TMB.
TMB Bank, formally known as Thai Military Bank, is
Thailand's seventh-largest lender. ING bought a stake in 2007
for 460 million euros, and now owns 25.2 percent directly and
5.84 percent though non-voting depository receipts. ING decided
to forfeit its option to buy an additional 5 percent stake in
TMB last year.
Japanese banks and insurers have this year launched deals
worth $8.15 billion in Southeast Asia to beat slower expansion
at home. MUFG's acquisition of Ayudhya would be the biggest
acquisition by a Japanese bank in the region.