Bank of Ayudhya to buy AIG and GE financial businesses
BAY's president and CEO Tan Kong Khoon
Bank of Ayudhya Plc (BAY), Thailand’s fifth largest commercial bank, is in the process of acquiring a Thai subsidiary of American International Group and the consumer financial businesses of General Electric units.
According to two separate statements made on Friday by the bank, BAY said the transaction for it to acquire the AIG’s subsidiary, CFG Services Co Ltd (CFGS), is pending an approval of its shareholders at a meeting on August 20 and then another approval from the Bank of Thailand and is expected to be completed by the end of September this year while the acquisition of GE financial businesses, worth about 13.75 billion baht or USD391 million is subject to various regulatory, corporate and shareholder approvals, as well as the completion of a definitive agreement.
In the CFGS deal, the bank said CFGS, offering hire purchase and title loan products to its customers through 163 branches nationwide, has assets of about 2.0 billion baht with a loan portfolio of 1.5 billion baht.
Tan Kong Khoon, the bank’s president and chief executive officer, said in the statement that the transaction will allow BAY to enter into a new customer segment as CFGS has a strong presence in the title loan market, and the acquisition is in line with the bank’s strategy to add variety to its consumer banking business.
Meanwhile, in BAY-GE Money deal, another statement said the Thai bank and GE Capital, which owns 33 percent of the stake in BAY through GE Capital International Holding Corp, have agreed in principle on the sale of GE Money’s businesses to BAY.
The bank also reported to the Stock Exchange of Thailand that the 13.75-billion-baht deal would include the plans to acquire 100 percent of the shares held by GE Capital Corp in GE Capital Thailand (GECT), 100 percent of the shares held by GE Capital International Holding Corp in General Card Services Ltd, 50 percent of the shares held by GECT in Krungsriayudhya Card Co Ltd and 49 percent in Tesco Card Services Ltd.
As of March 31, 2009, BAY has total assets of 734.58 billion baht and operates a full range of banking services through 583 branches throughout Thailand. On January 3l, 2007, the Thai bank and GE Capital Global Banking have become strategic partners, with GE Capital is now the bank’s major shareholder with 33 percent stake while the Thai founding group, Ratanarak Family, holding 25 percent of the stakes in BAY.
GE Money Thailand is the country’s largest card issuer, with over 2.2 million cards in circulation through its Central and Robinson credit cards and joint ventures with Tesco and BAY.
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