HONG KONG: Industrial & Commercial Bank of China Ltd, the world's largest by value, is expected to make a tender offer for a controlling stake in Thailand's ACL Bank Pcl by November, Thai Finance Minister Korn Chatikavanij said.

"The finance ministry and the central bank have agreed in principle to the deal because we believe it will benefit the economy and the Thai financial sector," he told reporters in Bangkok yesterday.

ICBC is due to make a tender offer for shares of ACL Bank held by the Thai finance ministry, which holds 30.6 percent, and Bangkok Bank Pcl, which holds 19.3 percent, Korn said. ICBC and the government have to discuss a price for the shares, he said.

ICBC first announced the plan to buy ACL Bank in April 2008, and has been waiting for Thai government approval to purchase more than 49 percent of the lender. Under Thai takeover rules, investors who buy a stake that exceeds 25 percent of a company are required to make an offer for the remaining shares.

The deal follows more than $6 billion of acquisitions by ICBC in Indonesia, Macao, South Africa and Canada during the past two years to accelerate expansion in emerging markets.

Chairman Jiang Jianqing, whose bank has more customers than Russia has people and $241 billion of cash and equivalents, aims to triple the share of profit coming from abroad to 10 percent.

"The move will get ICBC a step closer to becoming a significant player in the region now that you can find its footprint in almost all major markets in Asia," said Liu Yinghua, a Shenzhen-based analyst at Ping An Securities Co, adding, "China and Thailand have close economic ties, which will further facilitate the deal."

Thailand is shedding stakes in commercial banks it bought during the 1997-98 financial crisis to raise funds as the government's budget deficit swells to a record.

The Thai government may implement a so-called financial master plan to increase the number of new entrants and competition in the financial industry in the fourth quarter, Bank of Thailand's deputy governor Bandid Nijathaworn said last month. The Southeast Asian nation has 14 commercial banks, compared with 128 in Indonesia.

China is the third-largest export destination for Thailand and the country's second-biggest source of imports, according to the Ministry of Commerce. ICBC wants to become a regional and eventually global bank to serve the trading needs of its customers, Jiang told the official Xinhua News Agency in an interview last week.

After a government bailout four years ago, ICBC is now the world's biggest bank by market value and profit. It has 16,000 outlets nationwide and 143 branches overseas as of June 30. Overseas assets stood at 314.8 billion yuan ($46.1 billion) at the end of June.

State-backed ICBC's overseas expansion began in December 2006 with the purchase of 90 percent of PT Bank Halim Indonesia.

The Chinese lender bought 79.9 percent of Seng Heng Bank in Macao for almost 4.7 billion patacas ($589 million) in 2007, and in March 2008 acquired a fifth of South Africa's Standard Bank Group Ltd for $5.4 billion, in the largest overseas acquisition by a Chinese bank.

ICBC in June agreed to buy control of Bank of East Asia Ltd's Canadian unit, gaining a foothold for expansion in North America with its first acquisition on the continent.

Bloomberg News

(HK Edition 09/30/2009 page3)