BBL board opts for organic growth over acquisitions

Inorganic growth from buying businesses might not be the way forward for Bangkok Bank, which has no plan to consider acquisitions for overseas expansion even though it is financially strong enough to follow such a path, executive chairman Kosit Panpiemras said yesterday.
“We have invested much in terms of human resources and time, along with achieving an in-depth relationship with customers. We want to make the existing resources stronger to ensure the branches overseas can serve both Thai and local clients for the long term,” he said.
An organic growth strategy can provide a return on investment in less than three years, he added.
“When customers study business opportunities overseas, the bank will follow the countries that they are targeting and consider branch expansion to help ensure clients can successfully do business there. The products and services of the bank’s foreign branches must also be attractive to local people,” Kosit said.
In its overseas expansion to date, Bangkok Bank had focused on major financial cities such as Hong Kong, Tokyo, New York and London. The bank chose these locations because, even though it knew doing business in financial hubs would not be an easy proposition, it wanted to lay the foundations for the next business generations, he said.
Size, stability and network are the three key factors for the bank when considering setting up branches abroad, whether they are in developed, developing or emerging countries.
Bangkok Bank, the only Thai bank to have widened its network to several countries, now operates 26 branches in 13 markets, seven of which are in Asean.
The upcoming implementation of the AEC in a little over two years’ time has given a shine to Asean countries and provided a firm focus for the bank, he said, adding that Asean connectivity has convinced it to build a strong structure, especially in local human resources.
The bank plans to open a third Indonesian branch in Medan in |the near future, and might also consider resuming operations in Cambodia.
Indonesia is the biggest economy within Asean. However, the bank only has two branches there, despite entering the country in 1968.
“We must catch up in Indonesia because there will be greater business opportunities and Thai companies are expected to expand their businesses there,” said the executive chairman.
Revenue from overseas branches accounts for 18 per cent of overall income, a level that the bank prefers to maintain because the AEC also |benefits the provincial market. Many small en-terprises in the provinces will have the chance to upgrade to medium-sized and large operations and expand their businesses within Asean, he said.
Kosit cited the example of bank client Southland Rubber, a leading producer and exporter of natural rubber, which plans to open plants in Medan, Badan and Kalimantan in Indonesia.
The company’s decision has encouraged Bangkok Bank to open a branch in Medan, he added. Medan is a crucial source of rubber and Southland Rubber is the first Thai company to invest in the area.
Chumnarn Nopakunkajon, deputy managing director of the company, said the approaching AEC is opening up opportunities for selling and trading rubber. The company has, therefore, decided to expand its business in Malaysia and Indonesia ahead of the AEC’s coming into force.
Doing business in Malaysia and Indonesia is not easy, but the company believes when the AEC is implemented, regulations will be relaxed.
“As a local company, remittance is one area of potential concern. However, Bangkok Bank helps us because it has a network in Asean and elsewhere. We can ask clients to transfer money through its branches. The bank is not providing funding, but facilitating re-mittance and letters of credit.
“Businesses expansion overseas is therefore made comfortable, as the company can look for new markets without concern over problems with transactions,” he said.