Bailing out a Thai Bank
Lanchner, David, Global Finance
When Thailand lifted its 25% ceiling on foreign investment in Thai banks, it was a clear admission that the country desperately needed foreign capital to keep its financial system afloat. To stave off insolvency, not to mention resuming loans, the country's 15 licensed banks are believed to need infusions of more than 160 billion baht ($4.5 billion), a sum equal to the banks' share offerings and retained earnings for the past four years. But will opening the door to foreigners mean that the country will lose control of its banking sector?
So far the answer is no: Cross-border investors aren't exactly throwing their money at Thai banks. Nine banks have announced that they're looking for capital increases. The Netherlands' ING Bank has tentatively agreed to take a 10% stake in Siam City Bank, but the deal is reportedly in trouble over concems that the new capital will do no more than cover losses in some of Siam City's financial subsidiaries.
By early November the only one to have taken in foreign investors was Laem Thong Bank, the smallest of Thailand's banks and one not so active as others in property lending. Michael Sofaer, a secretive London hedge fund manager who used to run equity research in Hongkong for Schroder Securities, teamed up with Sheikh Ahmed alSabah, a member of Kuwait's ruling family (and president of the Asia Olympic Committee) to share a 40% stake at roughly book value, or $28.5 million each. At the same time, United Telecommunications Industry of Thailand took a 10% stake. …