SCB eyes stakes in financial tech firms

The team will be headed by Krieng Wongnongtaey, first executive vice president. Arthid said the bank would seriously look for investments in those listed companies and allocate an annual budget to that end. At present, overseas investment accounts for less than 1 per cent of its total balance sheet of Bt2.55 trillion, he said.

The bank’s net investment last year was Bt537 billion, up by 6.8 per cent from 2014, mainly from an increase in available-for-sale investment.

Of the bank’s consolidated investments, 89 per cent were in government bonds and state-enterprise securities.

"SCB is critically interested in investing in financial-technology companies overseas because they have an increasing role in the financial sector, and if one day they can kill the banks’ payment services, having shares in those companies will help offset the matter," he said.

He raised the examples of Google, Visa and MasterCard as the kinds of companies that should be invested in.

"The core business remains but when we have sufficient money, we should allocate that money for investment, and investment in financial technology can help strengthen the bank’s health together with helping it deal with technology," he explained.

Apart from investing in listed companies overseas, the bank will explore many ways to form partnerships, so it needs a team to monitor this specifically, he said.

Arthid said that before investing in a particular company, the bank had to make sure it was a legitimate firm with solid foundations and good corporate governance, and not just a play for speculators.

The bank’s direct investment in listed "fintech" companies is separate from its interest in start-up businesses, for which investment will be handled by its new wholly owned subsidiary Digital Venture Co, he said.

He said the bank intended to drive up the overseas-investment portion of its balance sheet from the current 1 per cent. Even if the return on investment is small initially, it should become more significant when the bank has increased its investment in fintech and in equities of listed energy companies, another area with good business potential in his view.

Recently, SCB invested in Gunkul Engineering’s private-placement stocks worth Bt947.86 million, representing a 3-per-cent stake in the listed renewable-energy company.

SCB says its investment in this private placement was in line with the bank’s policy to diversify its investment in businesses with strong potential, as Gunkul is a leading integrated energy player with strong growth prospects. Its many renewable-source power plants are realising revenues from the sale of electricity for commercial purposes and the firm has projects under development both inside and outside the country.

Arthid said the bank might consider increasing its shareholding in Gunkul because alternative and renewable energy provides attractive returns due to the increasing demand for electricity following the economic development of the country.

Alternative energy was made a priority by the government for national energy stability under the Alternative Energy Development Plan 2015-36, which aims to increase the proportion of power provided by alternative sources from 10 per cent in 2014 to 20 per cent in 2036.