CTBC Bank, a wholly owned subsidiary of Taiwan’s CTBC Financial Holding Co., has set a goal of becoming the largest shareholder of LH Financial Group Public Company Ltd (LHFG) in Thailand by raising its stake in the Thai group.
CTBC Financial said CTBC Bank had decided to invest 4.2 billion Thai baht or about NT$3.9 billion (US$137 million) to acquire 2.33 billion LHFG shares. The acquisition plan has been approved by a board meeting of CTBC Financial, the Taiwanese firm said.
After the transaction, CTBC Bank will see its stake in LHFG rising to 46.6% from the current 35.6%. The acquisition plan is pending an agreement to be signed by both sides as well as regulatory approval from Taiwan and Thailand, CTBC Financial said.
In 2017, CTBC Bank spent about NT$15.1 billion to acquire a 35.6% stake in LHFG as the first Taiwanese financial institution to own a stake in a Thai counterpart. CTBC Financial spokesperson Chiu Ya-ling said LHFG had been fundamentally sound before the COVID-19 pandemic hit Thailand, contributing about NT$1 billion in profit to CTBC in 2018 and 2019.
In 2020, however, its bottom line was affected by the pandemic and its return on equity fell to about 5%, from 8% seen in 2019 and 2020, in the wake of an increase in non-performing loans, Chiu said.
Nevertheless, if Thailand eases its restrictions against foreign investors’ ownership of up to 49% in a financial institution, CTBC Bank will likely take a higher stake in LHFG as part of its efforts to extend its reach globally, Chiu noted. She said LHFG focuses on corporate banking and under its corporate umbrella, the group owns LK Bank, LH Securities and LH Fund Management businesses.
LH Bank, which has 108 branches, is the core business of the Thai group, ranking as the 13th largest commercial bank in Thailand in terms of asset value, according to Chiu.