Different paths in banks' move abroad
Major Thai banks have different strategies for expanding their networks overseas to serve Thai customers and foreign investors ahead the Asean Economic Community (AEC).
Siam Commercial Bank (SCB) used to have a strong overseas presence, but that changed after the economic crisis in 1997. As a result, it now has only a few branches and affiliates in five Asean countries.
Vichit Suraphongchai, chairman of the bank’s executive committee, said it wanted to resume its overseas expansion, so this will be a year of investment in human resources, systems and capital to prepare for setting up more branches abroad.
SCB is forming an international team to prepare for the network expansion.
Vichit said the bank was conducting a feasibility study on enhancing its presence in emerging markets in Asean, as well as India and China.
“Even though SCB’s move into international markets will come after others’, we can say we are ready to set up a stronghold in emerging markets within three years,” he said.
The strategies for overseas expansion at SCB could be acquisitions, joint ventures, partnerships with local banks or its own investment. The model would depend on the location. Meanwhile, the bank will have to study which businesses it should offer customers abroad.
“As a universal banking operation, we have a full range of services. SCB’s role in corporate banking proved that we are not only a lender but also an adviser. At least in Asean countries, the SCB brand must be known within three years,” he said.
Bangkok Bank, which has the largest overseas network of any Thai bank, with 26 locations in 13 key economies, is preparing to open more branches in Asean countries. It has also changed its mindset to concentrate more on serving Thai customers rather than foreigners after seeing increased transactions and investment overseas.
Bangkok Bank was the first Thai bank to operate overseas in 1954. Its strategy is to set up its own branches rather than joint ventures or acquisitions.
Kosit Panpiemras, its executive chairman, said having its own branches was important for supporting customers.
Chartsiri Sophonpanich, president of Bangkok Bank, said international expansion would take place quickly before the AEC is effective in 2015. However, it might consider other options for network expansion apart from its own investment.
Partnerships with local banks could be a good way for Thai banks to move ahead with the AEC, and Bangkok Bank might follow Kasikornbank in this, he noted.
KBank is expanding its overseas network by forming alliances with banks in Asean, Japan and China. These partnerships save costs and allow co-development of services and financial products to match customers’ requirements, said Songpol Chevapanyaroj, an executive vice president of the bank.
“We do not know what impacts the AEC will have on the Thai and other Asean markets. Partnerships with local banks are the best solution for preparing for the AEC. Once we see a clear picture of the AEC’s effects, we might consider founding our own branches,” he said.
Currently, KBank has seven bank partners in four Asean countries – Vietnam, Indonesia, Singapore and Laos. In China, it has established a branch in Shenzhen with the cooperation of Minsheng Bank, and it plans to open two more branches in that country this year.
Banthoon Lamsam, president and chief executive officer of KBank, has noted that China is a large country where it is not easy to set up branches without partners. He said Bangkok Bank was likely the only Thai bank that could make inroads in the market because has had a foothold there for more than 20 years.
