Transfer of 55% stake of Krung Thai Bank won’t shake share price, say analysts

The deal isn’t about buy/sell, they said.

Market participants were abuzz with concern about Krung Thai Bank’s share price when reports that Thailand’s Finance Ministry was planning to acquire the 55% stake in KTB held by the Financial Institutions Development Fund for THB100b.

But according to analysts from Maybank Kim Eng, there’s absolutely nothing to worry about, as the deal isn’t about buy and sell, but a mere transfer from the Fund to the FM.

“The deal is to prepare for the government’s bigger plan of transferring all state-owned enterprises to a holding company the government is setting up,” Maybank Kim Eng said.

Additionally, Maybank Kim Eng says the government is likely to swap KTB shares with some of FM’s assets and possibly, bonds.

“The FIDF issues bonds to finance debt incurred from bailing out troubled financial institutions. The FM is responsible for interest payments while the BOT is responsible for the principals (now by allowing the Fund to collect deposit fees from domestic commercial banks twice a year),” Maybank Kim Eng added.

Consequently, as a joint FIDF responsibility, the FM and the BOT may find a way to transfer the stock without clearly quoting the KTB prices for the deal to unintentionally mislead the market, Maybank Kim Eng explained.