Surprise resignation of BAY chief concerns analysts
Yesterday's announcement of the resignation of Mark Arnold, Bank of Ayudhya's president and chief executive officer, is a concern to analysts because of the GE shares overhang in the institution.
The bank reported to the Stock Exchange of Thailand that Arnold had declared his intention to step down as director, president and CEO effective January 1.
Asia Plus Securities analyst Usanee Liurut told The Nation that according to high-ranking bankers at BAY, Arnold was resigning his positions at both the bank and General Electric Group and would return to Europe.
His resignation could open the way for new shareholders, with GE trying to sell its 25-per-cent stake in Thailand’s fifth-largest bank.
However, GE has to date been unable to dispose of its remaining holding, leading to concern over an overhang in the stock, the analyst said. The 25-per-cent stake is crucial for setting the bank’s business direction.
BAY insists it will continue to be profitable despite Arnold’s resignation.
The analyst said the Krungsri board would meet within two days to decide on a new president and CEO for the bank, with the next office-holder coming from within BAY.
A MayBank Kim Eng Securities (Thailand) analyst said the business direction of BAY would continue despite the GE shares overhang, which is a worrying issue for the bank.
It is not easy for GE to sell the remaining 25 per cent to new investors because of many conditions, including the "one presence" rule.
Potential buyers would be interested in acquiring an overall stake of more than 25 per cent, which would entail Ratanarak Group, a major local shareholder also hold
ing 25 per cent of BAY, agreeing to sell its holding. However, the group has no plan to sell its stake in the bank.
An executive at the bank told The Nation that the executives were shocked by Arnold’s resignation, and that the bank needed to act swiftly, given the impact on the confidence of clients.
"We will hold a meeting to discuss the business direction, and Arnold is expected to take part," the executive said.
BAY is an "outperforming" bank thanks to its major portfolio in retail banking and instalment loans. Outstanding lending at present is nearly Bt700 billion, compared with Bt610 billion at the end of last year, mainly on the bright outlook for vehicle sales and domestic consumption.
The resignation has, however, shaken investors, with BAY’s stock price yesterday morning falling to Bt29.75 from an opening of Bt30, despite a rise in the overall stock index.
The share price yesterday closed Bt0.50 lower at Bt 30.
