LH Bank freezes plan amid Euro-zone crisis
Land and Houses Bank has suspended its plan to find a foreign partner as it has to be more cautious on studying the backgrounds of potential partners who might be involved with transactions in the euro zone, said president Sasithorn Phongsathorn.
LH Bank earlier was in talks with a foreign firm to support expansion after upgrading its status to a commercial bank. However, that firm has business with Europe, which is seen as a risk for LH Bank. To ensure that the financial problems in Europe will not affect its banking business, the search for a partner will be put on hold until the euro crisis is less severe, she said.
After upgrading to a commercial bank, its status is stronger and it can expand lending in its corporate and SME (small and medium-sized enterprises) portfolio, so even without a partner, she believes the bank can grow by itself.
It assets as of the end of this year are expected to be Bt100 billion.
Its corporate and SME loan portfolio has increased significantly. to 65 per cent from 20 per cent of the total, while retail loans, mostly mortgages, account for 45 per cent. ??that adds up to 110%?? The bank will maintain the two portfolios at 50:50. Sasithorn said the bank was putting more emphasis on corporate loans to cash in on investments in infrastructure, in which it will join in terms of syndicated loans.
LH Bank yesterday financed half of a syndicated loan of Bt2.46 billion to Electricity Generating Co (Egco) for three solar farms with a combined output of 22 megawatts. It is the first privately owned project in Thailand with a solar tracking system. Kasikornbank is the mandated lead arranger in the syndicated loan, financing 25 per cent, with the remaining 25 per cent of the loan supported by ICBC (Thai).
LH Bank expects the high rate of loan growth seen by the banking industry in the first five months to be further backed by demand for retail loans driven by the rising cost of living, as well as loans to both Thai companies and foreign firms operating in the Kingdom.
The global economic problems have affected the liquidity of foreign banks, and as a result, foreign companies in Thailand have shifted to baht-based facilities at local banks as foreign banks are unable to provide financing in the amounts they require.
Moreover, Thai companies are preparing for the Asean Economic Community in 2015, and this has accelerated loan demand as well, Sasithorn said.
The huge demand for lending in the first half of the year was mainly due to post-flood reconstruction and investment by businesses.
