Thai banking trio set to recapitalise Lao branches

Move to comply with amended regulations

Three large Thai banks are recapitalising their branches in Laos to comply with the Bank of the Lao PDR’s amended capital regulations for both local and foreign commercial banks to meet minimum requirements over the course of five years.

Kasikornbank (KBank) is in the process of injecting fresh funds into its Lao branches, with the recapitalisation set for next month, said Barvorn Srisangatrakul, first vice-president of world business group.

Under the amended regulations, the Lao central bank requires foreign commercial banks to raise their minimum registered capital from 50 billion kip (US$5.8 million) to 30 billion kip. For local banks, the regulator requires their minimum registered capital to be increased from 100 billion kip to 500 billion kip.

The Lao central bank allows commercial banks to increase capital either on a one-time basis or in phases over the five-year period.

KBank’s branches in Laos have registered capital of $40 million, and the bank plans to add $23 million over the next five years, or $4.6 million annually.

In 2023, KBank’s registered capital for branches in Laos will be $63 million, exceeding the minimum requirement, Mr Barvorn said.

KBank, Thailand’s second-biggest lender by assets, has operated in Laos since 2014 and has two branches.

As of September, the bank’s Lao branches posted a net profit of more than 10 million baht, with a total loan portfolio of 2 billion baht, comprising only commercial loans and no nonperforming loans.

Mr Barvorn said the bank introduced mobile banking and e-wallet services in Laos and managed to acquire about 30,000 users.

There are more opportunities for the bank to expand its fee-based income through the online platform in Laos.

“KBank aims to use proceeds from the capital increase for infrastructure investment covering core banking, technology and security systems,” Mr Barvorn said. “This would support online banking business expansion.”

Deja Tulananda, executive chairman of Bangkok Bank, said BBL is ready to increase capital to meet the regulation.

It has operated a banking business in the neighbouring country for 26 years through two branches offering corporate loans, trade finance and custodial services.

BBL, Thailand’s third-biggest bank, has the largest international banking network for a Thai bank, with 32 foreign branches.

Kamalkant Agarwal, adviser to the chief executive on international banking business for Siam Commercial Bank, said SCB is considering raising capital for its Lao branch in compliance with the new regulations.