ANZ quits bid for Thai bank stake
SYDNEY, Australia (CNN) -- Australia's ANZ Bank has dropped plans to buy into Thai Military Bank, saying it could not reach an acceptable deal with the debt-laden Thai lender.
Responding to Friday's announcement by Australia's fourth-biggest bank, Thai Finance Minister Suchart Jaovisidha said the government would inject money into TMB and overhaul its management.
The Finance Ministry already has a 49 percent stake in TMB. The son of Thai Prime Minister Thaksin Shinawatra holds 7.5 percent, while the Thai army holds 15 percent and the navy has a 2.2 percent share.
The ANZ decision reflects the bank's well-known caution about investments in Asia after being forced to write down its stake in Indonesia's Panin Bank three years ago.
ANZ was approached by TMB in April to look at taking a stake of up to 20 percent as part of a recapitalization program. Thai media at the time speculated a stake of that size would cost about $170 million.
TMB, Thailand's sixth-largest lender, needed to raise 20 billion baht ($480 million) to meet loan-loss provisions and restructure some of its debt.
About 13 percent of the bank's loans are non-performing.
ANZ chief executive John McFarlane said Friday that while the bank was looking for strategic options in Asia, it was equally focused on reducing its overall risk.
"Unfortunately we could not find a way to create an asset mix that would be both acceptable to TMB and consistent with ANZ's strategy and low risk approach," McFarlane said.
"While we will continue to consider smaller opportunities in Asia, we believe this will only occur over a longer time frame," he said.
Shares in TMB closed 3.6 percent higher Friday at 5.80 baht, compared with a 1.2 percent advance for the broader market.
In Australia, shares in ANZ closed 0.33 percent higher at A$18.60, roughly in line with the broader market's gain of 0.26 percent.
Analysts believe that closing off the Thai option means the Australian bank can begin exploring other options in Asia, with China regarded as its most natural focus.
ANZ's group managing director for strategic development, Peter Hawkins, was quoted in business daily the Australian Financial Review on Friday as saying the bank was keen to build its presence in China.
ANZ established a licensed branch in Shanghai in 1993 and another in Beijing in 1997.
In April the bank signed a co-operative agreement with the Shanghai Rural Credit Cooperative Union and potentially could expand this relationship by taking an equity stake.