ING targets May launch of $1.2 billion Thai bank stake sale: sources
ING NV is aiming for May to launch the sale of its $1.2 billion stake in Thailand's TMB Bank , as the Dutch financial services company awaits the end of Malaysia's election to include more bidders, sources familiar with the matter told Reuters.
The planned sale of the 31 percent stake comes as ING sheds assets to repay a 2008 bailout by the Dutch government. It also comes at a time when mergers and acquisition activity in Southeast Asia's banking sector is expected to hit a record level this year.
Targeting a May launch is meant to encourage Malaysia's two dominant banks - CIMB Group Holdings Bhd and Malayan Banking Bhd - to join the auction, the sources said. The two banks, and any other potential bidders from Southeast Asia's third-largest economy, are expected to hold off on any major moves until a new government is determined. Malaysia has set national elections for May 5.
The sources said the auction was also likely to attract interest from Japanese, Chinese and South Korean lenders. The sale could also spark a takeover battle for TMB, which has a market value of $3.8 billion, as the potential buyer would be required to make a mandatory offer for the rest of the bank under Thai law.
Foreign banks can buy up to 25 percent of a Thai bank without central bank approval, but a stake of up to 49 percent requires approval from the Thai central bank and more than 49 percent requires approval from the Thai government.
ING has picked J.P. Morgan to find a buyer for the stake in TMB Bank, Thailand's seventh-largest lender, the sources said.
The sources declined to be identified because the sale plan is not public. ING and J.P. Morgan declined to comment.
"ING has informed us they will appoint a financial adviser to look into the TMB stake," TMB's chairwoman, Saowanee Kamolbutr, said without elaborating. Saowanee is the representative of Thailand's Finance Ministry on the TMB board.
SHEDDING ASSETS
ING, which has been selling assets worldwide to repay a 10 billion euro ($13 billion) state bailout, has raised $3.9 billion by shedding parts of its Asian insurance and asset management businesses.
ING bought the stake in TMB, formerly known as Thai Military Bank, in 2007 for 460 million euros. It owns 25.2 percent directly and 5.84 percent though non-voting depository receipts.
The TMB stake sale plan comes after ING decided to forfeit its option to buy an additional 5 percent stake in TMB last year, the sources said.
Thailand's Ministry of Finance, which bailed out TMB after ANZ pulled out of a deal in 2003 to buy a stake in the Thai lender, holds 26.1 percent of TMB. The ministry has in the past encouraged ING to buy its stake, sources have told Reuters previously.
"The finance ministry has not chosen an adviser. The ministry wants ING to make a decision first, either to sell or buy," TMB's Saowanee told Reuters.
"However, TMB performance is generally okay and the finance ministry and ING have no rush to sell the stake. The ministry and ING have been good partners for some time."
Thailand's financials subindex has jumped 42.4 percent since July 2011, with sentiment underpinned by political stability and robust loan growth on the back of a strong economy.
"Several Malaysian banks have expressed interest to go into Thailand, so this is a significant opportunity to do that," said the head of equity research at bank in Kuala Lumpur.
Share of TMB Bank did not trade on Monday because Thai financial markets were closed for a public holiday.
M&A ACTIVITY
ING's impending exit from TMB comes as General Electric Co explores the sale of its $1.8 billion stake in another Thai lender, Bank of Ayudhya . Japan's Mitsubishi UFJ Financial Group Inc <8306.T> is the frontrunner to buy GE's stake, although the sale is mired in regulatory uncertainty.
Southeast Asian bank M&A activity is set to rise to a record level this year, with about $21 billion worth of deals in the pipeline.
Southeast Asia, home to 600 million people, is forecast by Swiss banking group Julius Baer to boast nearly half a million millionaires by 2015 with investible wealth of $2.2 trillion. That would offer fertile ground for banks at a time when growth in Western markets is seen as limited.
Yet the proportion of working age people with bank accounts in the region pales in comparison to the developed world.
This ratio sits at 20 percent in Indonesia and Vietnam and just 10 percent in Cambodia, while it is above 60 percent in Thailand and Malaysia, according to the U.S. Agency for International Development. Countries such as Australia and New Zealand have nearly 100 percent financial reach.
(Additional reporting by Manunphattr Dhanananphorn in BANGKOK and Al-Zaquan Amer Hamzah in KUALA LUMPUR; Editing by John O'Callaghan and Chris Gallagher)