Thai bank Krungsri expands footprint in Southeast Asia, including Vietnam

September 15, 2021 | 16:19
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Thailand’s Bank of Ayudhya (Krungsri Bank) is signalling interest in expanding its footprint in Southeast Asia, including Vietnam.
Thai bank Krungsri expands footprint in Southeast Asia, including Vietnam
Krungsri aims to generate 10 per cent of its profits from overseas markets

Krungsri targets to generate 10 per cent of profits from overseas markets, compared to the current 4 per cent, cited Reuters.

"We will use our strengths to build new business, diversify, and build resilience. We will start with the retail markets, which is our strength, and then advance to commercial segments if there are opportunities," said chief strategy officer Pairote Cheunkrut.

In August, Krungsri inked an agreement with Vietnamese lender SHB to purchase 100 per cent of consumer finance company SHB Finance.

Under the agreement, SHB will transfer 50 per cent of SHB Finance's charter capital to Krungsri and the remaining 50 per cent after three years when the two parties satisfy certain conditions and meet the relevant regulatory requirements.

The size of the deal was rumoured to be around $156 million. SHB Finance is among the five largest consumer finance companies in Vietnam, along with FE Credit, Home Credit, HD Saison, and MCredit.

According to Reuters, the Thai lender's regional initiatives are part of the bank’s strategic plan. For instance, Krungsri made inroads into Cambodia by acquiring Hattha Kaksekar Ltd. (HKL), a microfinance institution providing inclusive financial services such as loans and savings to low-income families and micro-entrepreneurs in rural and urban Cambodia.

"Our end game is to have a footprint in all ASEAN markets," Pairote added.

Founded in 1945, Krungsri is currently the fifth-largest bank in Thailand in terms of loans and deposits. The bank provides a full range of banking services to both commercial and individual customers.

Japanese megabank MUFG currently holds nearly 77 per cent of Krungsri’s stake. MUFG is also a strategic shareholder with approximately 20 per cent of Vietnam’s state-owned lender VietinBank.

According to GlobalData, Vietnam remains a prolific market in ASEAN. The S-shaped country is attracting various investments from several companies globally, including those from Thailand. Along with Krungsri, other Thai banks are also eyeing expansion in Vietnam.

Other Thai financial institutions are also expanding their presence in the region. Bangkok Bank acquired around 89.12 per cent in Indonesia's Bank Permata in a $2.7 billion deal in 2020, which is considered the largest acquisition in the bank's history.

By Luu Huong

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