The transaction is subject to the completion of definitive documents and regulatory approval and is expected to close by June 30, 2007. The transaction will provide for proportionate Scotiabank representation on the Thanachart board of directors, as well as strong participation in Thanachart Bank management.
Scotiabank's agreement also contains provisions to increase its ownership stake up to 49 per cent for an equivalent price by December 31, 2007, should legislation allow, subject to a one-year extension and further call rights for a four-year period.
"This agreement provides for the acquisition of a significant stake in Thanachart Bank, demonstrating our commitment to finding opportunities to drive revenue growth," said Rick Waugh, Scotiabank President and Chief Executive Officer. "Scotiabank is optimistic about Thailand's growth potential and we look forward to growing our operations in the Asia-Pacific region."
As Scotiabank celebrates its 175th anniversary, earnings in the international division have increased to Cdn$1.1 billion, or 30 per cent, compared to Cdn$489 million, or 23 per cent in 2001.
Rob Pitfield, Executive Vice-President, International Banking, Scotiabank, said: "International Banking is an increasingly important aspect of the Bank's operations, as we continue to grow around the world, both organically and through acquisitions. Our goal is to drive sustained, profitable growth in each country where we operate, as we adapt to the local market by drawing on our core strengths and our strategic advantages."
"The partnership between Thanachart Bank and Scotiabank leverages the strengths of both of our institutions and is strengthened by our shared commitment to the exciting potential of Thailand," said Banterng Tantivit, Chairman of Thanachart Bank. "We have a positive outlook for the rest of 2007 and are expecting strong asset growth, improving margins and continued good credit quality, while expense growth will moderate."
With about Bht257.47 billion (Cdn$9.1 billion) in assets and about 6,000 employees, Thanachart Bank has the fastest growing branch network among the Top 10 banks in Thailand, with 142 branches and 260 automated teller machines (ATMs) across the country. It is also the leading automobile lender in Thailand with a 24 per cent market share for new autos. In addition, the Bank provides a full range of financial services through subsidiaries in fund management, brokerage activities, insurance and leasing.
"We view this transaction as a catalyst for future growth in Thailand's attractive banking sector," said Michele Kwok, Senior Vice-President, Asia-Pacific and the Middle East, Scotiabank. "Thanachart Bank is a solid financial institution, with a very strong core business in the automobile sector and a solid management team. We are confident Scotiabank will add strategic value that will generate strong financial returns."
With a young and growing population of 65 million people - twice the size of Canada - Thailand is a sizeable developing market, with a Gross Domestic Product of US$205 billion that is forecast to grow four-to-five per cent in 2007.
Scotiabank has operated in Thailand since 1981, providing corporate, trade finance and treasury services to local and international companies. The assets of the Scotiabank branch will be sold to Thanachart Bank.
"As a result of Scotiabank's long presence here, we have developed a deep understanding of the country," said Ms. Kwok. "Our knowledge and experience makes this investment a natural progression for Scotiabank's development in Thailand." -- www.cnxmarketlink.com
