SCB Plc – The Inmates are taking over the Asylum!

The Inmates are taking over the Aslyum! SCB doubles the size of its investment banking team!

Ok maybe that is an unfair comment as Siam Commercial Bank is a fantastically well-run bank since Dr. Vichit Suraphongchai came on board to advise the bank and eventually become its CEO in 2007 and today is the most profitable bank in Thailand in terms of net profit despite its smaller asset base and is now in the top 5 on the Stock Exchange of Thailand in terms of market capitilisation. Even though several of my friends work there and I know that they are fantastic bankers that always have the clients best interests in mind, but…

I just can’t help but start to get worried once I see Investment Bankers potentially becoming an integral part of a Commercial Bank. In my mind commercial banks aren’t supposed to achieving an ROE of more than GDPx2 of the country they operate in because otherwise they are taking on far too much risk with depositors and shareholders funds, but alas today’s world is far different from the 70’s and 80’s.

see below for the article

http://www.bangkokpost.com/business/economics/255684/scb-doubles-size-of-investment-banking

Siam Commercial Bank (SCB) has doubled its investment banking (IB) team for a further expansion of its wholesale banking business prompted by robust local and regional economic growth. Sopon Asawanuchit, an executive vice-president, said SCB has raised its IB unit to 40 executives and staff, both locals and foreigners, making it the largest one in the country.

Ten more persons will be added next year, he said.

The aggressive move is in line with the greater opportunities now presenting themselves, particularly merger and acquisition deals involving medium-sized corporations, said Mr Sopon. The team now oversees 24 transactions worth 100 billion baht, 13 of them local and international mergers and acquisitions. The other deals comprise five initial public offerings, three equity offerings, two property funds and one advisory role. Strengthening the IB unit will boost SCB’s fee-based income, said Mr Sopon.

“Industrywide, fee-based income totalled 1.4 billion baht last year and will increase to between 1.6 billion and 1.7 billion baht this year. SCB has several deals in the pipeline that will push its financial services revenue above the industry average and keep us No.1 in the market,” he added.

Separately, Arthid Nanthawithaya, a senior executive vice-president, said IB and capital markets will play the most important role in fee-based income from wholesale banking business this year.SCB projects fee income from this business segment will increase to 45% of revenue by year-end from 30% now.

Mr Arthid said offering integrated solutions with innovative ideas will be the basis for SCB’s fee-income growth.

As well, economic expansion in Asean and the advent of the Asean Economic Community in 2015 will see even more business opportunities for local corporations. “These factors will encourage more regional deals, and local business operators _ indeed, Thailand itself _ are being transformed by the changing environment,” said Mr Arthid.

“Local businesses in several major sectors including agriculture, food, energy and property are upgrading themselves. A comprehensive financial solution would help customers to complete their transformation.”

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