Thai banks prodded to expand overseas

Should target ASEAN countries for M&As or joint ventures.

The proposed integration into a single market by the Association of Southeast Asian Nations or ASEAN presents great opportunities for Thailand’s financial services firms. ASEAN integration is expected to lead to increasing trade and investments.

Analysts said Thai commercial banks should change their strategy of being takeover targets for banks from Singapore and Malaysia or other countries and instead look for opportunities to take over other banks in ASEAN.

Some Thai banks are expected to acquire or enter into joint ventures with other ASEAN banks, especially in Vietnam, Cambodia, Laos and Myanmar. Thailand’s advantage in geography places it in an ideal position to grow within ASEAN.

Thai banks so far have undertaken fewer investment and corporate banking activities ASEAN compared to their competitors. Their net revenue from international banking is also smaller than competitors from Singapore and Malaysia.

From 2007 to 2011, the international revenues of Thai banks was less than 5% of group revenue compared to over 40% of total revenues earned by Singaporean or Malaysian banks. Thai banks are also smaller than peers in Singapore and Malaysia.