SCB gets nod for additional debentures
A Siam Commercial Bank shareholders meeting yesterday approved an additional debenture issuance worth Bt100 billion on top of the current amount of Bt150 billion to fund the bank's loan expansion, possibly driven by large corporate investments.
“Issuing debentures is part of the bank’s fund-raising apart from deposits. The bank’s annual lending is about Bt200 billion,” said Vichit Suraphongchai, chairman of the SCB executive committee.
The bank has never before asked for a mandate for such a large debenture issue, totalling Bt250 billion, he said.
But the bank’s assets, especially outstanding loans, over the |past two years have grown substantially.
Therefore, the bank needs to be able to serve clients who require long-term funds.
“We have grown in three segments – retail, small and medium-sized enterprises, and wholesale – while we have acquired a new customer base.
“The additional amount of Bt100 billion in debentures is to serve long-term investments, while funds from deposits serve the short term,” he said.
He said some existing debentures in the amount of Bt10 billion would expire, so the bank had to prepare a new issue.
Vichit noted that liquidity management was part of the bank’s operation, as it had to ensure funds for the short, medium and long terms to prepare for business expansion.
He said that although SCB has not reported its operational results for the first quarter of the year, the trend was impressive, and it expected the momentum of loan growth to continue through the rest of the year on the quick recovery of Thai enterprises.
However, the bank wants to see increased investment by businesses, noting that much of the investment this year would be in the state sector rather than the private |sector.
He said deposits remained a key fund-raising channel for SCB and other local banks, reflected in the fierce competition for the deposit market.
The US economic crisis is a lesson of financial houses that did not give importance to deposits, while the surviving banks in the United States are those that focused on maintaining their deposit base, Vichit said.
Kannikar Chalitaporn, president of SCB, said it might consider revising its loan-growth target after lending in the first quarter showed impressive figures. SCB this year has set a loan-growth target of 12-14 per cent.
