December 16, 2016 11:00 pm JST

Kasikornbank expands in China with local incorporation

Thai bank to offer full-scale renminbi services and push fintech initiative

YUKAKO ONO, Nikkei staff writer

Kasikornbank Chairman Banthoon Lamsam, right, has signed an agreement to develop a baht-yuan settlement system with Chinese fintech firm IBS.

BANGKOK -- Kasikornbank will soon be Thailand's second bank to be locally incorporated in China, with hopes of cashing in further on the growing trade between the two countries.

Thailand's fourth largest bank by assets is currently going through the final procedures with the Chinese authorities, with official approval to be completed by mid-2017, Chairman Banthoon Lamsam told reporters on Thursday. Incorporation in China will enable Kasikornbank to operate on the same conditions as a local bank, including offering full-scale renminbi services to local clients. It would become the second Thai bank to incorporate in the country after Bangkok Bank.

Also in 2017, the bank will open a new branch in Shanghai, its fourth in Chinese territory after those in Chengdu and Shenzhen on the mainland, and one in Hong Kong.

"China is a super power country, especially at a time when so much change is going on in the global political landscape," Banthoon said. He added: "The trading power of the West will be more difficult to rely on. We must lead on the East in which China stands as an important country."

Neither the economic slowdown nor the massive shadow banking industry in the country seems to bother Banthoon. "China does have its own problems but they have the system to adjust and control so the situation will remain manageable and can go on," he said.

Currency settlement

Additionally, Kasikornbank on Thursday signed an agreement with Chinese fintech firm International Business Settlement to develop a baht-yuan cross-currency settlement system using blockchain technology.

It will be based on an IBS platform which the Chinese company claims will be a cheaper, quicker and safer alternative to the dominant SWIFT settlement system. IBS Chairman Luo Feng said that his company is working with central banks in Europe and other regions in the world to develop the new settlement and clearing network.

"IBS has the technology and network to facilitate international settlement that is not based just on the U.S. dollar, at a time when the yuan's international presence is increasing," Banthoon said.

The system IBS is developing will enable direct settlement of transfers between baht and yuan, without the need to use U.S. dollar conversions at any point in the procedure.

Baht-yuan settlement has been increasing over the past decade as China has become Thailand's largest trade partner, overtaking Japan and the U.S. It is the largest export destination for Thailand and is its second largest source of imports. Annual trade between the two countries is worth around 2.3 billion baht ($64 million).

Chinese tourists in Thailand have spiked in recent years too, now accounting for more than 20% of all tourism arrivals.

Although Bangkok Bank, which was locally incorporated in China in 2009, is the leading Thai bank in the country, Kasikornbank sees plenty of opportunities and is keen to fill the remaining gaps.

Recently, the bank nominated Pipit Aneaknithi, the head of its world business division, as president. With this addition the bank will have four presidents, effective Jan. 1, and will also be ready to expand further overseas, particularly in China.

"Silicon Valley, Tel Aviv, London might have some significant innovations, but the biggest demand for funding for innovation is in China," Pipit said. "It's a young country where the young generation has a faster adoption rate [for new technologies] than other countries."

Asia300

Kasikornbank Public Co. Ltd.

Thailand

Market(Ticker): BKK(KBANK)
Sector:
Industry:
Finance
Regional Banks
Market cap(USD): 12,800M
Shares: 2,393.26M
Asia300

Bangkok Bank Public Co. Ltd.

Thailand

Market(Ticker): BKK(BBL)
Sector:
Industry:
Finance
Regional Banks
Market cap(USD): 9,905.67M
Shares: 1,908.84M

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