BBL braces for competition in corporate sector
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Largest Thai bank fears big loss of market share to newcomer Mitsubishi UFJ with larger scale and expertise
Bangkok Bank expects its share of the corporate market has a high chance of being reduced after the entry of Japanese mega-bank Mitsubishi UFJ through its acquisition of a stake in Bank of Ayudhya (BAY).
BBL, the country’s largest bank, is the major player in the corporate sector and has a greater footprint in the international market than other Thai banks.
Chaiyarit Anuchitworawong, executive vice president of BBL, said Mitsubishi UFJ could take a chunk of the market as the mega-bank has larger scale and expertise in the corporate segment.
“From now on we must be much more careful to maintain our relationship with our Japanese corporate customers.
“However, by nature, Japanese people choose to [carry on such] relationships if they are treated [well] by their partners,” he added.
Japanese make up the second-largest group of foreign customers at BBL, which established a presence in Japan in 1955 by setting a branch in Tokyo, and then founding an Osaka branch in 1970.
The two branches have 20 Japanese regional partner banks to service small and medium-sized customers.
BBL set up a special division in Thailand 10 years ago to look after Japanese corporate activities.
Chaiyarit said the bank had time to adjust its strategy and secure its relationship with Japanese customers as the deal between Mitsubishi UFJ and BAY is not completed. The international market accounts for 17-18 cent of BBL’s portfolio.
It will open a branch in Medan, Indonesia, by the end of this year after being granted a licence from that country’s central bank.
He said BBL was looking into a possibility in Cambodia because it has no branch there.
“If we have a branch in Cambodia, it will mean BBL will cover all of the Asean market. We are interested in Cambodia but stepping into this country needs time as well,” he said.
Oranuch Apisaksirikul, group chief executive of Tisco Financial Group, said the group was continually adjusting and looking for business opportunities even as the banking industry gets new players.
1997 crisis
“Foreign banks became stakeholders in Thai banks after the 1997 crisis, so the impact from the coming of Japanese banks is not much,” she said.
As a small bank, Tisco needs to adjust its strategies and be aware of new competitors because it is not easy for small institutions to access corporate customers. However, small banks have high flexibility in presenting different solutions to customers, she said.
Oranuch said that even though the full implementation of the Asean Economic Community would create many opportunities, the group was in no hurry to expand into the region because it had plenty of room to grow in the domestic market.
Tisco must ensure it has enough clout to compete once the group expands its business outside, she said.
“In Asean countries, Cambodia is a potential market for hire-purchase, which is Tisco’s area of expertise, but if we do expand into Asean, having good local partners will ensure our future success,” she said.
