[Update-1] Thailand’s oldest bank unveils massive reform to break banking norms

Shares of Siam Commercial Bank (SCB), Thailand’s oldest bank and the third-largest lender, jumped robustly by 25 per cent on Thursday after it unveiled a plan to take a big leap into financial technology (FinTech).

The share price settled around 126.50 baht as of 10.35 am, still up 15.5 per cent, with the biggest transaction value over 8.5 billion baht.

SCB announced a restructuring plan this week which would see it delist itself and launch a holding company SCBX as a “mothership” of its FinTech platform units, with the aim of growing its business beyond bank regulations.

As the financial world has been disrupted by emerging technologies, “SCB must no longer limit itself to the traditional banking business,” said Arthid Nanthawithaya, the Chief Executive.

Analysts said that the move was bold but would wait and see how successfully the plan is implemented.

“The strategic move to restructure into a holding company would unlock value and
growth potential by giving the flexibility to risk compliance framework,” said Ratasak Piriyanont at Krungsri Securities.

After the registration, SCBX will swap shares with SCB and be listed on the bourse, followed by a one-off dividend payment of 70 billion baht to the new firm and asset transfer.

Arthid expected to see a surge in customer number from the current 16 million to over 200 million across the ASEAN region in five years, with a market capitalization of 1 trillion baht.

However, the new firm will still be subject to central bank oversight, but not within the same “banking paradigm,” he added.

An industry insider who requested anonymity told Thai Enquirer that the move to pay out dividends to invest in its subsidiaries was “genius,” as the central bank could not intervene and it has nothing to do with cash draining. 

“This helps unlock value in a big way,” the source said. 

An analyst at KTB Sevurities, Saranrat Panthachotirat, said she was “optimistic” on the aggressive five-year objectives of SCBX. “Return on equity is expected to reach 15 to 20 per cent in the next two year.”

Apart from AISCB, a digital lending joint venture with the top mobile carrier announced late Tuesday, the FinTech units include a venture capital fund with Charoen Pokphand Group to invest in digital assets, a standalone credit card firm, and a leasing joint venture with the Millennium Group Asia.

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