RETAIL BANKING | Cesar Tordesillas, Thailand

Number of Thai banks may be reduced

The number of Thailand’s banks may shrink from 14 to as few as five.

Boontuck Wungcharoen, chief executive officer of TMB Bank, noted that competition and cost-cutting fuels consolidation.

"Thailand has too many banks for the size of the market," said Boontuck. "The country should probably have five or six strong banks, so I think you will see consolidation over the next five years."
Thailand nationalised more than half of its commercial banks during the 1997 Asian financial crisis, and has

"In a lot of markets the regulator is the main obstacle to consolidation, which isn't the case in Thailand," said Daniel Fineman, Credit Suisse Group AG's Thailand research head. "The Bank of Thailand in its master plan said it would like to see fewer banks."

"There is a need for consolidation as the few smaller banks are offering only select services such as vehicle financing and stock brokerage services," said Vikas Kawatra, head of institutional broking at Maybank Kim Eng Securities (Thailand) Pcl, the country's biggest brokerage.

Loans by Thai commercial banks grew 14 per cent in the first quarter as the country's recovery from last year's flood crisis spurred demand for credit, the central bank said in a report in May.

Consolidation in Thailand "will probably happen at some point, but it might not happen anytime soon," Credit Suisse's Fineman said. "The bigger banks aren't eager buyers. There's also a lot of overlap between the smaller banks."

Acquisitions by international banks may be more likely than mergers between local lenders, Fineman said.

"For the next two years, I don't see any non-Asian bank pursuing acquisitions aggressively," Kim Eng's Kawatra said.

Thailand has 14 licensed commercial lenders, including local units of Malaysia's CIMB Group Holdings Bhd., Industrial and Commercial Bank of China Ltd, and Singapore’s United Overseas Bank Ltd., according to the central bank.

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