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LH Bank may hike cap to back more corporate lending

Feb 18. 2016
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By SUCHEERA PINIJPARAKARN
THE NA

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LAND and Houses Bank is considering an increase in registered capital to retain Tier 1 capital above the 10-per-cent level, as it has to use a large amount of capital to support corporate lending to bolster loan growth.
The bank’s registered capital is Bt13.63 billion, while its BIS capital ratio is 14 per cent, of which 10.5 per cent is Tier 1. 
Sasitorn Phongsathorn, president of the bank, said it was normal to increase capital, but she did not disclose more details, such as whether the newly issued shares would be allocated to existing shareholders or to strategic investors.
Strategic partnerships are part of LH Bank’s plans even though it has been able to outperform its peers through organic business since 2011. 
Last year, the bank issued a 10-year subordinated debenture worth Bt4 billion to raise Tier 2 capital.
Between 2011 and 2015, LH Bank averaged annual loan growth of 26 per cent, and it wants to maintain growth of no less than 10 per cent over the next three years, for which corporate loans will be a key driver. By the end of 2018, outstanding loans are targeted at Bt200.5 billion. 
Last year, LH Bank recorded loan growth of 16.8 per cent to Bt149 billion.
Senior executive vice president Sutharntip Phisitbuntoon said the total loan-growth target this year was 10-15 per cent this year, and 16-20 per cent of the new lending would be to corporate customers, especially in the infrastructure and logistics sectors. 
She said LH Bank hoped to participate in syndicated loans with large banks, which are restricted by the Bank of Thailand from lending more than 25 per cent of their Tier 1 capital base to a single borrower – so-called single lending limits (SLLs).
Under such SLLs, LH Bank can support loans of Bt5 billion to Bt5.2 billion to companies under a group. The bank was interested in backing a syndicated loan and letter of guarantee to TrueMove, which won a licence to 10 megahertz of the 900MHz telecom spectrum with a bid of Bt76.3 billion.
LH Bank has faced the SLL rule as well, as it has invested in equities and funds of groups of companies via LH Securities and Land and Houses Fund Management. 
The bank might dilute its investment portfolio to Charoen Pokphand Group to comply with the SLL rule, or it might ask the central bank to ease the rule. 
However, she noted that with the bank’s vision to focus more on corporate lending, the capital increase was normal practice. 
 

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