Awards: Siam Commercial Bank powers ahead

This year in a tight battle between two Thai banking heavyweights, Siam Commercial Bank pipped Kasikornbank to several awards on its radical reforms.


The Best Bank award bounces back and forth between Siam Commercial Bank (SCB) and Kasikorbank (KBank). This year we decided it was SCB’s to mark for a number of reasons.

Firstly and perhaps most importantly, SCB is Thailand’s most profitable bank, recording net income of Bt43.2 billion ($1.27 billion) in 2017. It also records a number of best-in-class efficiency ratios including ROAA, which stood at 1.46% in 2017.

Secondly, SCB has thrown a grenade into the safe and conservative world of Thai banking. This January it announced a sweeping three-year transformation from bricks-and-mortar to digital and ‘strategic partnerships’ with retail and corporate customers.

The most eye-catching feature of the strategy, entitled “Going Upside Down", is the closure of a majority of the bank’s 1,153 strong physical branch network. In 2018, 200 branches are being closed down.

By 2020, 750 will be gone. And not all of the remaining branches will be retail-led. Some will offer business support principally to SMEs, some will be dedicated to wealth management.

The bank claims there will be no headcount reduction, since staff members are being retrained. By 2020, it forecasts, this will allow it to reduce customer-related costs to 30% below 2017 levels.

Some financial analysts remain skeptical given the cost of the digital transformation (Bt40 billion in 2018) and the higher wages SCB will need to pay more qualified staff that remain. During 2017, operating expenses rose 11.6%.

However, the bank maintains 2018 will mark the peak for its cost-to-income ratio. It is forecasting a 42% to 45% range compared to 38.7% in 2016 before it started ramping up its IT spend.

One of the first fruits of recent IT endeavors has been the re-launch of its mobile banking app, SCB Easy. New features include being able to withdraw money from ATMs without using a card.

The app also allows customers to book restaurants and movie tickets. At the end of 2017, it had 6.5 million users and bank officials are forecasting 10 million by the end of 2018.

Overall, the bank saw assets rise from $81.4 billion in 2016 to $92.7 billion according to SNL figures.

Notwithstanding its desire to change, the bank was still able to record healthy loan and deposit growth during 2017. The former rose 4.9% and the latter by 3.3%.

However, while this meant the loan-to-deposit ratio weakened, SCB’s overall deposit mix improved. The bank reported a CASA ratio of 65% in 2017 compared to 59.7% in 2016.

The bank has also consistently been able to leverage its strong balance sheet and corporate relationships into an equally vibrant investment banking franchise. It has won FinanceAsia’s award for Best Investment Bank for a number of years.

During the current awards period, Bloomberg data shows that SCB was the only Thai bank that was equally strong across all three business divisions, although Phatra ran it a very close second thanks to its phenomenal M&A franchise and block business.

Where SCB really stood out was in ECM where it ended the awards period neck-and-neck with Bualuang, which just pipped it to the number spot according to Bloomberg data. SCB executed a balanced mix of IPOs and secondary deals and across a range of sectors; with property and energy the two stand out categories.

For example, SCB was one of the leads on Thailand’s biggest IPOs of the awards period, helping Gulf Energy to raise Bt23.99 billion ($753 million). It was also the lead on the country’s second largest secondary offering; a Bt10.13 billion accelerated overnight block trade for Siam Makro.

SCB also led a whole range of real estate investment trust-related offerings reflecting its strong fixed income franchise and the cross-benefits that confers across the investment bank. One notable deal in this sector was SHReit’s Bt3.5 billion IPO, representing Thailand’s first international hospitality reit and the first with an independent reit manager.

SCB was also active in the property sphere on the M&A side where it ranked second behind Phatra. Here its largest deal comprised Asset World Group’s acquisition of three property funds for Bt59.34 billion.  

Finally in DCM, SCB did not top the league tables but it came a respectable fifth. Notable transactions include B Grimm Power’s Bt11.5 billion 11-tranche project bond, which re-financed its existing debt and the a Bt14 billion deal by the Ministry of Finance in Laos, the country’s largest and longest offering to date.

As part of its Going Upside Down strategy, SCB is also taking its private banking operations up a notch with the formation of a joint venture with Julius Baer. The Swiss private banking group will hold 40% of the new business, which is one of a growing number of joint ventures across Asia between some of the region’s emerging national private banks and Europe’s oldest wealth managers.

SCB hopes the joint venture will help it to double its Bt600 billion over the next three- to five-years as it offers clients more ways to diversify their assets into international products. It is also hoping this will help to shift its investments to deposit ratio to an 80%/20% split from the current 62%/38% split.

During 2017, the bank further improved its client management by opening its first SCB Investment Centre. Here, clients can access market data from Bloomberg and Reuters as well as receive advice and attend presentations. The bank has plans to open a further 19 centres over the next few years.


Nailing down Thailand’s DCM House is always a difficult task because of a clustering effect at the top of the league tables caused by issuers appointing the same four or five lead managers to every deal. So winning this award boils down to which arrangers are apportioned the most league table credit, or have executed particularly innovative deals on a sole or dual-basis.

Kasikorn Securities scores well on both fronts and its bankers note that 2017 was not only a record year for Thailand’s domestic bond markets but also for their issuance activity too.

A couple of trends have been driving this strong deal flow, principally low domestic interest rates and M&A. Thai Inc’s expansion overseas, particularly into Vietnam, has led to a flurry of record-breaking bonds deals as companies seek to re-finance the bridging loans they take out to pay for their acquisitions. 

One example of this was Thai Beverages’ Bt50 billion offering in March this year, which encompassed tranches spanning maturities of two- to 10-years. This was a first for the group, which is not listed and had never issued long-term debt before.

Bankers say Kasikorn was awarded economics of 30% for the deal, which numbered seven lead managers in total.

Kasikorn’s innovative deals are also numerous. This March, it was one of two lead managers on a Bt4.2 billion bond by WHA Premium Growth Real Estate Trust (WHART).

This deal represented the domestic market’s second ever reit bond and its first benchmark-sized one. The deal also helped WHART to lower its cost of funding at in addition to switching secured debt into unsecured.

Then there is PTT Global Chemical’s Bt10 billion offering from last August. This deal was innovative from a regional as well as a domestic perspective.

Given the company is cash rich the main purpose driving the deal was to develop a loyalty programme among Thai retail investors, particularly senior citizens who were allocated 60% of the paper. The deal offered them a safe yield pick-up over bank deposit rates, with the coupon fixed at 3.05%.

Finally, Kasikorn was one of only two banks to execute a Bt10 billion tier 2 deal for ICBC China. Its own experience in the subordinated debt market undoubtedly helped with the execution of the deal, which represented the Chinese bank’s inaugural Baht-denominated public bond offering.


The Bangkok Bank subsidiary has won this award for four of the past five years. And this year, it was a worthy recipient again after topping the Bloomberg league tables.

In total, Bualuang claims credit for four IPOs and eight overnight placements and blocks, which raised Bt89.4 billion between April 2017 and March 2018.

One of its most impressive achievements was bagging a lead manager spot on three out of the country’s four top IPOs by deal size, which accounted for 60% of total IPOs by value during the course of the calendar year.

Last year was a particularly strong one for Thailand as a whole, with four Bt10 billion-plus IPOs: Gulf Energy, TPI Polene, TOA Paint and B. Grimm Power. Unlike many other countries around the region, Thailand seems to execute deals which work for both issuers and investors.

The majority of 2017’s IPOs traded up during secondary market trading, taking advantage of positive momentum and ample liquidity in the second half of the year.

For example, Bualuang was a lead manager on Gulf Energy’s Bt23.99 billion offering, which represented Thailand’s eight largest IPO on record. The deal was priced at Bt45 per share and had traded up to Bt77.5 just under two months later, before stabilizing at a slightly lower price.

A similar scenario unfolded with TOA Paint, the third largest IPO of the year, which Bualuang also led. This Bt12.2 billion offering was priced at Bt24, spiked to Bt36.2 within one month and had almost doubled to Bt42 by June 2018.

Bualuang Securities bankers believe one of the key factors attributing to the strong performance of Thai IPOs is the introduction of cornerstones, a relatively new concept for the country. Gulf Energy’s deal was particularly noteworthy in this respect since 17 cornerstones accounted for 31% of the total offering and 46% of the institutional book.

They say their philosophy is to try to maximize institutional participation since retail investors, who dominate smaller IPOs, tend to dump stock on the first day, causing unnecessary volatility.

Strong liquidity also helped fuel an uptick in secondary market trades during 2017, and Bualuang was right at the forefront. Its largest deals comprised a Bt17 billion rights offering for Siam City Cement and a Bt5.23 billion block trade for Eastern Water and Development.


This is the third year in a row Phatra Securities has won this award and well deserved it is for a business that does not have a big universal bank behind it.

What Phatra does have, as FinanceAsia, has pointed out in the past, is a very strong relationship with Bank of America Merrill Lynch, which gives it access to foreign clients and results in co-branded research among other collaborations. This partnership not only gives Phatra a more geographically broader view of Thai equity market trends than domestic competitors, but also a far deeper and more nuanced one as well.

At the end of last year’s awards process it also struck a deal with Credit Suisse, which sources external asset managers for Phatra’s domestic high-net-worth clients.

Phatra’s dual domestic and foreign perspective means co-branded research it produces is highly regarded. As of March 2018, it covered 82 large cap stocks out of a total 605 companies listed on the Stock Exchange of Thailand. This equated to 74% of overall market capitalisation.

Over the past calendar year, Phatra’s overall broking market share has fallen and stood at 4.3% in March 2018.

Its share of foreign flows, for example, fell from 9.1% in 2016 to 7.5% in 2017. However, bankers say this is not because competitors are eating into its market share, but thanks to the rise of high frequency trading.

The group’s overall institutional/retail split stood at 72% versus 28% in March 2018. During 2017 as a whole, Phatra brokered trades amounting to Bt1.13 trillion, with foreign institutions accounting for 56% by volume, followed by local institutions on 22% and local retail investors on 21%.

Phatra’s retail franchise is geared towards HNW clients and increasingly mass affluent ones too – a subsector in which it is really starting to make its mark. This latter business, known as Phatra Edge, was set up in 2013 and encompasses Thai citizens with investable funds of Bt2 million to Bt39 million. At the end of 2017, AUM had risen 25% year-on-year to Bt38.5 billion.

Another stand out aspect of Phatra’s business is its strength in block trades, a business area that overlaps with FinanceAsia’s investment banking award. There is no doubt that Phatra’s market insight gives it the confidence to bid more aggressively for bought deals and also provides it with the execution skills to pull them off.

Never was this more successfully demonstrated than when GIC decided it wanted to prevent market leakages ahead of sell-downs in Quality Houses and then Land & Houses late last year.

The Singapore government-owned entity asked brokers to sign a non-disclosure agreement after the market close on a Friday, with the intention of closing the trade before it opened the following Monday. The result was Thailand’s first weekend block trades, raising Bt3.556 billion and Bt10.64 billion respectively. 


Siam Commercial Bank (SCB) has been quick to pick up on the opportunities the Belt and Road Initiative could create not only for itself but also for its clients.

In 2013 it set up a dedicated China desk to serve Chinese enterprises expanding abroad, notably in Thailand. To offer a flavour of the strategic importance of this initiative, SCB’s China business development team – comprising nine executives – report directly to the president and chief executive of the bank.

To date, it has supported a host of key Chinese infrastructure-related firms in developing projects between the two countries.

In the past few years China’s foreign direct investment into Thailand has grown at a phenomenal rate of 25% per year. And in terms of trade, SCB claims to have facilitated $14.2 billion of Sino-Thai trade in 2017.

The bank has positioned itself to lead investment initiatives where it most expects business to accelerate, namely in high-tech industries such as solar panels, renewable energy, rubber products and infrastructure projects.

SCB’s China platform has so far grown to serve more than 50 Chinese enterprises, offering a credit line of more than $1 billion for Chinese corporates both onshore and offshore.

The bank has been keen to build its credentials in support of alternative energy projects.

One notable deal was its role as lead arranger for a $210 million syndicated financing transaction with Canadian Solar – a top-three global solar module manufacturer from China – to support its new production base in Thailand.

The transaction was 2017’s largest Chinese investment financing deal in Thailand, largest Chinese investment in Thailand, and largest cross-border financing deal in Thailand.

Other examples include the post-acquisition financing support it provided Guangdong Guangken Rubber after it bought Thai Hua Rubber for $174 million.


It was a great year for Citi in 2017. The bank not only managed to mark its 50th anniversary in the country, but also did so by improving every single one of its financial metrics in the process.

SNL data reveals strong growth across the board. Assets rose from $5.88 billion to $6.33 billion, while net profits jumped from $107.7 million to $132.63 million.

The bank’s efficiency ratios were also very good by regional standards too. Its NIM, for example, hit 4.13% compared to 3.81% the year before.

And 2018 is looking even better for the bank, which is practically the last foreign one standing in consumer banking. For right at the end of the awards period in March 2018, Citi purchased a $150 million unsecured personal loan portfolio and credit card business that should boost future profitability.

The seller was TISCO Bank, although in reality the 130,000 underlying customers come from Standard Chartered, which sold its loans and cards business to TISCO after it exited Thai retail banking. Bank officials say the portfolio represent a great add-on for Citi since Standard Chartered’s former customer base has so many synergies with its own.

Other retail initiatives during 2017 include adding QR payments on its credit cards, the first foreign bank to do so.

Indeed, one of Citi’s main strategic aims over the past few years has been to increase its digital footprint. This is a term many banks apply, but Citi says its digitisation extends well beyond the front office and deep into the back office as well unlike pretty much the rest of the Thai banking sector.

On the corporate banking side, Citi has built on its existing strength serving foreign multinationals by winning a number of important transactional banking mandates. These included becoming the main collection bank for Bridgestone Sales (Thailand).

Where Thai corporates are concerned, Citi also won an important mandate for arguably the country’s leading corporate behemoth, PTT. Last July, the bank was mandated to handle PTT LNG’s cash management operations. The following December, low-cost carrier, NokScoot, also started using Citi’s cross-currency payment services to facilitate payments to its overseas branches.

Citi has always been a strong presence for any Thai corporates raising money in the G3 bond markets and in 2017 it was a bookrunner on two significant deals: PTTE&P’s $500 million liability management and new bond issue, as well as Kasikorn Bank’s $400 million five-and-a-half year deal.


A number of banks had a reasonable year in Thailand. Credit Suisse was strong in placements, while Bank of America Merrill Lynch was on some of the biggest IPOs.

But it was UBS, which stood out for its work on two of the largest IPOs between April 2017 and March 2018, plus the largest M&A deal involving an international bank working for a Thai client.

Yet size is not everything and the key to winning this award was the value UBS added in a market which has always had a very domestic focus, thanks to the abundant liquidity on offer from Thai investors.

Both of the IPOs UBS worked on had sizeable international tranches. 

Where Gulf Energy’s Bt23.99 billion IPO was concerned, UBS brought in both cornerstone investors: Asian Development Bank (ADB) and Affin Hwang Asset Management. They accounted for 40% of the cornerstone tranche.

It also reports that its own wealth management unit placed the largest non-cornerstone order. In total, there were 40 international lines in the order book resulting in a final split, which saw foreign accounts (cornerstones and institutions) take 42% of the overall deal.

The deal priced at the top of its range at 26 times forecast 2019 earnings, but nonetheless still traded up 19% on its first day of trading from its Bt45 offer price.

A similar thing happened with TOA Paint’s Bt12.2 billion offering, which popped 33% on its first day despite being priced at the top of the range on a forward multiple of 21.06 earnings.

Nevertheless UBS reports that it was able to bring its international experience to bear and benchmark the deal against overseas comparables rather than Thai materials companies, which were trading around the 12 times level at the time of the deal.

The bank’s value-add was also demonstrated thanks to the investors it brought to the deal. In particular, it was responsible for Hillhouse Capital making its first investment in the Thai equities markets. In this deal, institutional and cornerstones investors accounted for 69% of the overall deal and bankers report the majority of paper went to foreign accounts.

Rounding off a good year for UBS was its ability to structure a workable solution for PTT Exploration & Production, which had been trying to purchase a 22.22% stake in Royal Dutch Shell’s Bongkok project for over a year. The $750 million acquisition represents Asia’s largest oil and gas deal since 2016.

¬ Haymarket Media Limited. All rights reserved.
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