SCB still plans to open first China branch despite woes
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ALTHOUGH China is witnessing an economic slowdown, Siam Commercial Bank is going ahead with its plan to establish its first branch there and is also considering expanding its footprint into southern China.
Yol Phokasub, president of SCB, said no one could predict whether China would have a hard or a soft landing, so the bank’s investment there should be adjusted according to the actual situation.
He said SCB was sticking with its plan to set up a branch in China because that country is a long-term investment destination for the bank.
SCB has had a representative office in Beijing since October 2013, and it recently applied for permission to set up a branch in Shanghai.
Arthid Nanthawithaya, chief executive officer and deputy chairman of the executive committee, said a branch in Shanghai would provide transac tional banking opportunities and the bank could support lending to large Chinese investors keen on Thailand.
“Lending to local Chinese companies is not the target because our |funding cost is higher than local banks’,” he said.
Arthid added that while the bank was interested in branching out into southern China, it was not yet part |of the business plan. However, the southern provinces of China are close to the CLMV sub-region (Cambodia, Laos, Myanmar and Vietnam), a market on which SCB focuses. Therefore, it is possible that SCB might have another branch in southern China at some point.
SCB has a presence in every CLMV country. Cambodian Commercial Bank is a wholly owned subsidiary; it has a branch in Vientiane; and it has a representative office in Yangon, which it hopes to upgrade to a branch when the Myanmar regulators allow it to do so.
SCB will open a branch in Ho Chi Minh City in March after receiving a foreign-branch licence from the Vietnamese authorities.
Yol said the international market was not expected to contribute a large proportion of revenue to SCB, which is standard for banks that have exposure overseas. For a Thai bank, business opportunities are mostly provided by the local market, which means the major revenue base is local, not international, he noted. SCB will outline its 2016 business direction to the media next week. However, in a meeting with analysts recently, Yol said SCB foresaw conservative growth of 4-6 per cent because of the uncertainty in the domestic economy.
