Thai banks need to prepare for open competition in the new AEC

The group’s latest move has been to acquire Sicco Securities plc (SSEC) from Thailand’s Siam Commercial Bank in a deal worth an estimated Bt767 million.
In addition, CIMB Group subsidiary CIMB Securities International will also purchase a majority stake of 70 per cent of SSEC from Siam Industrial Credit in a deal worth Bt1.72 billion, according a news report.
The acquisition will position the Malaysian group, which is now Malaysia’s second biggest bank, as a key player in the Thai securities industry.
Earlier, the group established a foothold in the commercial banking sector by acquiring Bank Thai, which is now called CIMB Thai Bank.
With a strategic focus on the 10-country Asean market of 580 million consumers, the group is turning its commercial banking business – which now covers five countries, namely, Malaysia, Singapore, Thailand, Indonesia and Cambodia – into an Asean-centric bank.
The vision is to create a regional bank with an Asean flavour whose ingredients are gathered from each of the Asean countries where the group is operating, by leveraging both cross-border staff and customers.
This means a one-size-doesn’t-fit-all policy, so the group serves its customers in each of the Asean markets according to their risk-reward preferences. For example, customers for loans in Indonesia may have a risk/reward preference rather different from those in Singapore.
The group also has leveraged the strengths of its local staff in all five Asean countries by sending them to work across borders in order to learn from each other.
Regarding the securities industry, CIMB group hopes its latest acquisition will help elevate its market position in Thailand. SSEC currently operates 13 branches in the country, with 269 staff.
According to Dato Charon Wardini Mokhzani, CEO-designate of CIMB Investment Bank, the acquisition will strengthen the group’s brokering platform on the Stock Exchange of Thailand.
At present, the group is among the top three brokers in Malaysia, Singapore and Indonesia, and aims to be in a leading position in Thailand within the next few years.
In the next few years, the group expects to double its market share in Thailand and aims to be one of the country’s top five stockbrokers.
Suchai Sutasthumkul, CEO of CIMB Securities Thailand, said derivative warrants and cross-border trading will be introduced to boost business growth in Thailand, as competition will intensify with the liberalisation of commission fees next year.
Currently, Thailand has a total of 38 member brokers on the Stock Exchange of Thailand.
Together with its commercial banking business, CIMB Group will have on offer a comprehensive range of financial services for its customers here.
The Asean-centric offensive serves as a warning for Thai banks and financial institutions that if they remain complacent and defensive they will have a hard time competing in the new era of the Asean Economic Community, in which intra-regional trade in goods and services will become freer, with zero import tariffs for most items.
Cross-border capital and investment flows as well as skilled labour flows will also become more open in 2015 among the 10 member countries of the regional grouping.