Merger of Thai banks TMB and Thanachart tip of the iceberg?

BANGKOK - The impending merger of Thailand's Thanachart Bank and TMB Bank, the country's sixth- and seventh-largest lenders by assets, is just the tip of the iceberg as more and more banks look to merge and compete with their larger regional rivals, according to a report by the data and analytics company GlobalData. 

Thanachart Bank is 51% owned by Bangkok-based publicly traded company Thanachart Capital Pcl while the Thai Government, and Dutch banking group ING Groep NV are the largest shareholders of TMB Bank with stakes of 25.92% and 25%, respectively.

The merger, which is expected to get the nod by the end of January, comes after the Government last year announced tax incentives for domestic banks to consolidate and improve competitiveness.

Andrew Haslip, Head of Content for Asia-Pacific Financial Services at GlobalData, says: "While the merger will create a national champion and Thailand's sixth-largest bank by overall assets, the main gains in market share will be in the retail deposit and credit card markets."

The merged entity will see gains in market share across all of the main retail banking lines of business, as both banks maintain a full product suite.

However, with a combined market share of 9.3% in retail deposits at the end of 2017, it will move just behind Krungsri Bank to become one of only six players with truly significant market share, according to GlobalData's Retail Banking Analytics dashboard.

Likewise, in credit cards the bank will vault ahead of established players such as Citibank, AEON, and Krungthai to become the third-largest issuer in the market.

With a strong position on both the asset-gathering and lending sides of the market, the merger is expected to create a strong competitor in the local market, says GlbalData.

Moreover, as this merger was at least partly prompted by the increased integration of the ASEAN banking market under the direction of the ASEAN Banking Integration Framework, it is expected that the new entity will become more regionally focussed.

Banks around the ASEAN region should expect the bank to quickly seek to compete more outside of Thailand.

Haslip concludes: "This move may just be the beginning. Further consolidation among ASEAN banks is expected over the next 12 months, as more and more banks merge to create scale across the rapidly-integrating region."  www.globaldata.com (ATI).