Mitsubishi UFJ, CIMB Eye GE Stake in Bank of Ayudhya

By Brian Robbins

Dec 01 2012, 13:08 PM EST

The general economic buoyancy in South-east Asian countries coupled with steady credit growth has perceptibly increased global investor interest in leading banks operating in the region. Bank of Ayudhya, the foremost retail bank in Thailand, is the latest to generate significant investor interest.

Recent reports indicate that Japan's banking major Mitsubishi UFJ Financial Group (MUFG) has bid for General Electric's (GE) 25.3 percent stake in Bank of Ayudhya, which is currently valued at $1.5 billion. Reports also indicate that CIMB Group Holdings, one of Malaysia's leading banks, has also made a bid for GE's stake in the bank. More bids are expected in the second round of bidding which is due in the latter part of December.

GE held some 33 percent in Bank of Ayudhya - which it acquired in 2007. However, in September this year it sold 7.6 percent stake in the bank and recouped most its initial investment. The conglomerate is now looking to sell out the remaining stake guided by its leadership decision to exit from all non-core businesses.

Some private equity firms had reportedly evinced keen interest in picking up GE's stake in the Thai bank but changed their tack owing to stringent banking regulatory norms in the country pertaining to ownership.

For one, there is a 49 percent cap on foreign ownership in Thai banks. Secondly, investors cannot invest in more than one bank as per Thailand's single presence policy on bank ownership. However, investors are aware that the Thai banking regulator is open to making exceptions for individual investment cases on merit, which will perhaps keep up global investor interest in Thai banking sector.

It emerges that the outcome of GE's sale process will greatly influence ING's decision to offload its 31 percent stake in TMB Bank plc which is worth about $786 million. Meanwhile, certain quarters expect a likely merger of Bank of Ayudhya with Siam Commercial Bank, which is Thailand's third-biggest lender.

So far, no official statement has been made regarding bids for GE's stake in Bank of Ayudhya or any merger plan.