I’ve referred to Siam Commercial Bank as the Purple Chicken since 2013 when they requested and received from the Bank of Thailand the right to expand the single lender limit from 25% to 60% to assist CP Group in the financing for their acquisition of MAKRO.

Source: https://www.bangkokpost.com/business/352709/bbl-ktb-agree-loans-for-cp-makro-deal

A few weeks ago SCB decided to become a tech company! And the share price went to the moon!! ( okok +20%…)

Here’s the summary:

SCB announces that it will delist via share swap with a new company SCBX – timeline 1Q22. There will be a special dividend of THB70b, 70% will be used to fund new business ventures, and 30% will be paid as dividends to shareholders (equivalent to THB6.18/sh based on 3399m shares) – time line 2Q22. EGM is set Nov 15. SCBX will become the holding company with shares in many businesses such as:

• Card X – spin-off the credit card business (old economy)  – to enter lower mass
• Alpha X partners with Millennium Group in luxury car lending business (old economy)
• Auto X operates a lending business, leasing, focusing on grass roots (old economy)
• Tech X cooperates with global technology (who?)
• AISCB collaborates with AIS to make digital loans (old economy new method)
• Purple Venture that runs the Robinhood app (now 150k merchants, 2.0m users) to morph into super app. 
• CPG-SCB VC Fund cooperates with CP Group to establish VC Fund (seed fund USD600-800m)
• Data X – probably springing from the Economic Intelligence Center
• SCB Securities old style broking going into the  digital asset space TokenX (crypto)
• SCBABACUS using AI/machine learning to do 1) nano finance (licensed), and 2) personal loan (license). Likely to do BNPL after raising funding
• monix -under app FINIX  also nano with 4.0m downloads and loans O/S THB2.4b. The market is expected to hit tHB700b by 2025 and FINX hopes for 15% market share.

Management targets to increase the number of customers to 200m through active partnerships and M&A (from 40m-50m customers now). It also targets to reach more than THB1t market cap (including IPO of subsidiaries and start-up unicorns). SCBx targets to be the leader in digital asset and tech data analytics. It plans to IPO CardX (credit cards and personal loans), Auto X (auto title loans), SCB Securities (with digital asset services) MONIX and SCB ABACUS (digital lending) in the next 3-5 years.

Purple Chicken:

The bank also set up a USD600-800m venture capital (VC) fund with CP group to invest in fintech businesses, such as block chain and decentralised finance. It’s too early to estimate contributions to SCB from digital lending or the VC fund.

The CEO has decided to change from his banker suits and ties to a t-shirt and suit. Definitely a signal that he’s up to speed with the changing times.

So what?

• It’s a clever move to work around the BOT regulations on banks.
• They’re effectively swapping the bank and a holdco. This deal will go through.
• Is it going to be worth 5-10x more than where it is today? Sure why not? It’s dependent upon the buyers in the market, the FOMO, they need just 1 success story in any of the subs for the valuation of SCBx to mimic what we see regionally in Indonesia or the US.
• Can they do it? It’s a bank…unless they’ve magically changed their supposed risk-focused strategy…I have my doubts.
• SCB was the first mover in cutting fees in the industry…thereby ruining all the banks ROEs for the past 4 years. Wouldn’t be surprised to see them try the same on all other fees/rates just to grab market share.
• And the one main thing they don’t talk about is that they have the highest exposure to mortgages and hotel loans in the industry. Yeah…not an issue at all. Maybe these loans will magically become NFTs and crypto tokens pushing the value higher in the metaverse thereby allowing the bank to not have to write them off.

• Can this bank really go regional? Sure, the CEO will start to wear Batik clothing to get the Malaysian and Indonesian markets and capture the hearts and minds of the future customer base.
• Apparently the new businesses will become 1/3 of total revenue by 2026. Wait wait I have some skin whitening product to sell you.
• Isn’t the purpose of decentralised finance to not use banks?
• KBANK have joined…calling an entity KX, we were looking forward to seeing KRABBANK instead (KBANK + GRAB). (hattip to JY) or KBANKXX and then we could see TTBXXX followed by TISCOXXXX…
• At the end of the day, despite all the wonderful news and storylines, I still think that its putting lipstick on a pig and the only thing that will save them is the regulations preventing competition within the country and markets that they operate in.