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Thailand: relative calm seems to have returned to the Thai banking sector. |
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Best bank:
Bangkok Bank
Best equity house:
Merrill Lynch Phatra Securities
Best debt house:
Thai Farmers Bank
Bank restructuring seems to be coming to an end with debt restructuring emerging as the next theme. Questions quite naturally focus on non-performing loans. Accusations of cosmetic adjusting echo around the institutions. The reported level of NPLs is 18% of loans. However if you add those to the write-offs the figure is still up in the region of 40%.
Bangkok Bank is the one bank that has stopped procrastinating and is moving in the correct fashion to restructure its debt.
The bank is moving aggressively into the retail market in an attempt to become the reliable all rounder. In the past it ignored this crucial sector, concentrating on wholesale corporate banking. Its market share in several retail segments is now impressive. With its 550 branches it has grabbed over 18% of the mortgage market, 16% of the ever-competitive credit card sector, and 21% in retail deposits. In the credit card sector, banks are throwing free cards at customers in desperate attempts to build market share.
On the wholesale side Bangkok Bank is particularly proud of its strong custody business, including its role as the euro sub-custodian depositary for Thailand. It boasts a total of 1,500 correspondent banks on its books.
It is the market leader in Thailand for financial institution payments volumes using the SWIFT network.
The bank reported net profits for the last four quarters. In the first quarter of this year net profit was Bt1.8 billion ($39 million), an improvement of 13% on last year.
Thailand’s debt and equity markets, like those in the rest of Asia, were very slack. Since hitting a high point in 1994, Thailand’s equity market has been on a downward spiral. In 2000 it plunged 44%. In an attempt to boost the markets, the country’s prime minister, Thaksin Shinawatra, promised to sell stakes in 18 state enterprises over the next three years. The mandate for Petroleum Authority of Thailand is being decided now.
Merrill Lynch Phatra Securities is always going to be in the running for such business. The joint venture is 51% owned by Merrill Lynch and 49% by Thai Farmers Bank. The strength of global distribution offered by Merrill Lynch and Thai Farmers Bank’s domestic capabilities make the joint venture a very powerful competitor in Thailand’s markets. And its franchise is growing ever stronger.
Merrill Lynch Phatra Securities’ secondary market business stands out. It commands a powerful 13% share in equity trading. Its research arm is also highly regarded in Thailand and across the whole region.
Thai Farmers Bank, with its broad domestic distribution, takes the award for best debt house. It was involved in seven domestic issues including the $367 million dollar bond issue for Siam Cement Public Co Ltd.
