CIMB Group cleared to buy 42.13% stake in BankThai
13-OCT-2008 Intellasia | Bernama
Oct 13, 2008 - 7:00:00 AM
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CIMB Group announced that it had received approval from the minister of Finance, Thailand, for the purchase of a 42.13% stake in BankThai Public Co Ltd
The approval was conveyed in a letter dated October 9 and paves the way for CIMB Group to emerge as the single largest shareholder in BankThai. The acquisition is now pending approval from Thailands Ministry of Commerce.
"We are pleased to receive this approval from the Thai authorities," said Datuk Seri Nazir Razak, Group Chief Executive, CIMB Group in a statement here Friday.
"We look forward to completing the purchase soon to enable BankThai to start growing again," he said.
In June this year, CIMB Group entered into a share purchase agreement with the Financial Institutions Development Fund (FIDF) to acquire the latters 42.13% stake in BankThai for a cash consideration of THB5.905 billion (RM577.4 million).
On completion of the purchase, CIMB Group plans to launch a mandatory general offer (MGO) for the remaining shares it does not own and initiate a capital restructuring exercise of the bank.
In assuming full acceptance of the MGO and a recapitalisation cost of RM500 to 600 million, CIMB Groups total costs for the transaction would rise from RM577.4 million to approximately RM1.9 billion.
BankThai is the ninth largest commercial bank in Thailand in terms of total assets with 147 branches.
It also has subsidiary businesses in stockbroking, insurance and asset management.
BankThai has a solid deposit and lending business as well as an operating base of SMEs and retail customers.
Its recent financial performance was weakened by write-downs and lending constraints arising from investment losses in foreign collateralised debt obligations (CDOs) last year.
The CDOs were written down and sold in the third quarter of 2008 but the bank has remained relatively inactive due to capital constraints.
"The fact that this is a banking turnaround situation has enabled us to acquire a precious controlling stake and limits our downside risk," explained Nazir.
"This acquisition is the final piece in the jigsaw puzzle for our regionalisation agenda.
"We remain comfortable with the acquisition price and turnaround plans despite the global financial crisis as we have always regarded this as a long-term strategic move," concluded Nazir.
The share purchase has received approval from Bank Negara Malaysia and is expected to be completed by the end of this year.
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