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UPDATE 1-Thai Thanachart plans $1.2 bln rights issue

Published 10/07/2009, 12:29 AM
Updated 10/07/2009, 12:33 AM
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By Manunphattr Dhanananphorn and Arada Kultawanich

BANGKOK, Oct 7 (Reuters) - Thailand's privately held Thanachart Bank, 49 percent owned by Canada's Bank of Nova Scotia, announced plans on Wednesday for a $1.2 billion rights issue, the country's biggest capital raising this year.

Thanachart, Thailand's top provider of car loans, said the 40 billion baht would help fund its bid for a 47.6 percent stake in Siam City Bank, the country's seventh-largest lender.

The Bank of Nova Scotia has expressed interest in Siam City Bank, whose shares have more than tripled this year on speculation over the price the stake could fetch and hopes a sale could be finalised rapidly, by the end of this year.

Scotiabank is keen to merge Siam City Bank (SCIB) with Thanachart to form Thailand's fifth-biggest bank with about 800 billion baht ($24 billion) in assets, competing with Bank of Ayudhya wwith assets of 707 billion baht as of August.

But such a move could face competition from Europe's biggest bank, HSBC Holdings Plc -- cited by bankers and analysts as another potential bidder along with and Barclays Bank Plc, which already owns 4.97 percent of SCIB.

Under the plan, approved by shareholders on Tuesday, Thanachart will issue up to 4 billion new shares at par value of 10 baht each, expanding its registered capital to 59 billion baht ($1.8 billion) from 19 billion baht.

The Siam City Bank (SCIB) shares sought by Thanachart are now held by the Financial Institutions Development Fund, the central Bank of Thailand's rescue arm.

Shares in Thanchart's parent, Thanchart Capital, jumped 2.7 percent to a six-year high of 19 baht on news of the rights issue. Thanachart is 50.9 percent held by Thanachart Capital.

"We haven't decided the timeframe for the fund-raising. We want a resolution from the shareholders," said a bank investor relations official who declined to be identified. The share sale might be in one tranche or several tranches, the statement said.

"It is in preparation in order to buy a stake in SCIB if we win the bid...and the rest will be used to boost our capital base," Chairman Banterng Tantivit told reporters.

Banterng declined to disclose the amount of funds needed for the acquisition until the bank completed due diligence.

Last month, the Financial Institutions Development Fund said the stake sale was expected to go through in the second quarter of 2010. SCIB has said four or five investors were interested in bidding for the stake. ($1=33.33 Baht) (Editing by Jason Szep)

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