TBank mulls exit from Siam City Life

Thanachart Bank is considering selling the rest of Siam City Life Assurance to a local insurer after divesting Thanachart Life Assurance to Britain-based Prudential Thailand early this year. 

“We’re not in a hurry to sell. The insurance unit is small enough to manage and the market has room to grow because of the low penetration rate,” Brendan King, deputy chief executive of the bank, said yesterday.

Local insurers are interested in Siam City Life Assurance, but the bank wants to ensure that a new owner can look after the staff and customers.

Siam City says it focuses on renewal premiums by keeping its 80,000-90,000 policyholders happy. In the first six months of this year, it recorded total premiums of Bt700 million.

When Thanachart Capital (TCAP), the holding company of Thanachart Bank, acquired Siam City Bank in 2011, Siam City Life was included in TBank’s assets. 

TCAP sold Thanachart Life Assurance for Bt17.5 billion in the first quarter of this year.

The bank has no plan to sell Thanachart Insurance, as the non-life unit can support its Bt400-billion auto-loan business, which is the market leader.

King was assigned by Bank of Nova Scotia to help oversee system settlement. Canada’s third-largest bank, which has been in Thailand since 1981, took a 25-per-cent stake in Thanachart in 2007 and increased its holding to 49 per cent in 2009.

In the three years after the acquisition of Siam City Bank, Scotiabank has thought about transferring information technology to TBank to boost its efficiency and competitiveness.

“We will improve Internet banking next year and spend over Bt100 million on more software and hardware. All systems will be completed next year,” he said.

In the next two to three quarters, the bank will introduce cash management, trade finance and retail products with the idea of offering them as a package to customers.

Thailand is the most important market in Southeast Asia for Scotiabank. It has given weight to organic expansion rather than mergers and acquisitions. The group has prepared US$3 billion (Bt94 billion) per year to capitalise its franchises outside Canada, whose combined customer base is larger than in the home country.

Anuwat Luengtaweekul, an executive vice president of TCAP, said that after realising an extraordinary gain from selling Thanachart Life, profit would return to normal in the second half. First-half net profit was Bt6.03 billion.

Sluggish consumption and high household debt have persuaded the bank to shift its sights to small and medium-sized enterprises from retail loans.

TBank will set aside additional loan-loss provisions of Bt2 billion to Bt3 billion in this second half after increasing its reserves by Bt5 billion last quarter to comply with Bank of Thailand requirements. Provisions in the first half reached between Bt7 billion and Bt8 billion, higher than the normal rate of Bt2 billion to Bt3 billion every six months, Anuwat said.