Tuesday, July 07, 2020

Two firms woo LH Bank to be major shareholder

Apr 24. 2015
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LAND and Houses Bank has been approached by two companies that have received nano-finance licences, asking the bank to be a major shareholder, as they want keep down the cost of funding to support their lending.

LH Bank president Sasitorn Pongsathorn said yesterday that in general it had provided loans to non-banks that have more experience in consumer finance than it does. Such lending accounts for nearly 20 per cent of LH Bank’s total loan portfolio.

Four firms were recently granted nano-finance licences by the government, and two of them want LH Bank to join with them as a shareholder.

“They want low-cost and reliable funding to ensure they have enough to grant loans,” she said. However, LH Bank will select only one of them, not both.

On Wednesday, the Finance Ministry licensed Fast Money Company, Thai Ace Capital Co, Mackale Group and Sahapaiboon (2558) Co to provide nano-finance.

Sasitorn said LH Bank would not get involved with the management of the selected nano-finance provider, as such firms have the needed expertise.

She said the introduction and expected expansion of the nano-finance scheme could provide an opportunity for her bank to make more loans to non-banks, but it wants to keep the proportion of loans in this category to around 20 per cent to control risk.

LH Financial Group, the holding company of the bank, yesterday held its annual general meeting, at which several shareholders asked about LH Bank’s progress on pursuing partnerships.

Anant Asavabhokhin, chairman of the bank, said it would need to find a partner eventually as, under Bank of Thailand regulations, shareholders are limited in the proportion of shares they can hold. Hence, the bank has to issue debentures to raise enough capital to carry on its business.

However, the bank will not rush to find a partner, observing that some foreign banks that have become partners of Thai banks have not demonstrated much success in doing business in this country. If a potential partner emerges that could help strengthen the e-banking segment and has a long-term vision for the partnership, it will be welcomed, he told the shareholders.

Next month, the bank will issue subordinated debentures worth Bt4 billion to sell to institutional investors and wealthy clients. After the sub-debt issue, its capital adequacy ratio will be 14.5 per cent, up from 12.5 per cent now. The increase in Tier 2 capital will help support its annual loan-growth target of 15-20 per cent for at least three years.

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