Bangkok--29 Mar--Land and Houses Bank
LH Financial Group Public Company Limited ("LHBANK") has entered into a memorandum of understanding in relation to Share Subscription Agreement (the "SSA MOU") with Taiwan's leading financial institution, CTBC Bank Co., Ltd. ("CTBC Bank"), forming a strategic partnership to strengthen its financial position and increase capital base for expansion of its banking business, Land and Houses Bank Public Company Limited. For this transaction, Siam Commercial Bank has been appointed as a financial advisor for LHBANK.
Ms. Sasitorn Phongsathorn (Chatsirivichaikul), President of LHBANK, said "LHBANK has entered into a SSA MOU with CTBC Bank agreeing in principle that LHBANK will issue a new share via Private Placement to CTBC Bank at 2.20 per share amounting to approximately THB 16,599 million. CTBC Bank will hold 35.6% in LHBANK and will jointly take on management role in Land and Houses Bank along with existing management team after closing of the transaction."
After the execution of SSA MOU, LHBANK and CTBC Bank will conduct due diligence and negotiate a definitive share subscription agreement. Both parties will take necessary steps to obtain approval from Bank of Thailand, Securities and Exchange Commission Thailand, Financial Supervisory Commission Taiwan and LHBANK's shareholder to seamlessly close the transaction by approximately end of 3rd quarter of 2016.
Additionally, LHBANK has been informed by Land and House Public Company Limited ("LH") and Quality House Public Company Limited ("QH"), its existing major shareholders, that CTBC Bank has also entered into a memorandum of understanding in relation to the shareholders agreement ("SHA MOU") with LH and QH. Upon closing of the transaction, LH and QH will dilute their holdings in LHBANK to 21.9% and 13.7% respectively.
This strategic partnership will be mutually beneficial to both LHBANK and CTBC Bank by enlarging LHBANK's common equity tier 1 by more than 2 folds to over THB 32,000 billion (Tier 1 capital ratio will be 21.3% after capital increase) to become a prominent regional player and honing LHBANK's expertise in the area of wealth management, digital banking and trade finance through leveraging on CTBC Bank's know-how. The strategic partnership will also uplift business capacity and potential of Land and Houses Financial Group including Land and Houses Fund Management Company Limited, Land and Houses Securities Public Company Limited and Land and Houses Advisory Company Limited.
CTBC Bank, a subsidiary of CTBC Financial Holding, is Taiwan's largest private bank with asset value of more than USD 109 billion with over 106 outlets in 14 countries globally such as The United States of America, Canada, Japan, India, Indonesia, Philippines, Vietnam, Hong Kong, Singapore, China, and Thailand. CTBC Bank is rated A2 by Moody's.
LHBANK has 127 branches across Thailand with total asset size of THB 200 billion. The bank has expanded rapidly over the past years with YOY asset growth, loan growth and net profit growth at a rate of 20.2%, 16.8% and net profit of 35.5% respectively while retaining a credit rating of A- from TRIS rating.