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Thailand‘s oldest bank acquires a 51% stake in a cryptocurrency exchange
SCB invests $535 million as it ramps up its fintech push.
Siam Commercial Bank, Thailand's oldest lender, is expanding its fintech footprint with the acquisition of a 51 percent controlling stake in local cryptocurrency exchange Bitkub Online for 17.85 billion baht ($535 million).
Bitkub's total valuation is estimated to be 35 billion baht ($1.05 billion) in the deal, making it the country's latest unicorn in an era when startups were considered scarce. The term "unicorn" refers to a private company with a market capitalisation of at least $1 billion.
The investment comes as traditional banks in Southeast Asia seek to modernise in order to compete with tech giants offering digital services such as consumer loans and electronic payments.
"Digital asset exchanges have exploded in popularity over the last few years and will continue to do so in the long run," said Arthid Nanthawithaya, the bank's CEO and chairman. "The move is consistent with SCB Group's strategy to transform into a financial technology company, addressing new consumer needs and entering a new competitive arena that will emerge rapidly over the next three to five years."
Investors reacted positively to the move, with Siam Commercial Bank's shares rising nearly 3.5 percent to 134.5 baht following the announcement. Bitkub coin, the startup's cryptocurrency, increased 180 percent in value to $2.78 from $0.99, according to market tracker Coincost.
The bank anticipates completing the acquisition in the first quarter of 2022, pending approval from the Bank of Thailand and the country's Securities and Exchange Commission.
SCB is well-known for its novel ownership structure. It was established in 1904 by Thailand's royal family, and King Maha Vajiralongkorn now owns 793 million shares, or nearly a quarter of the bank.
Thailand's fourth-largest bank in terms of assets already has a fairly diverse clientele. Among the companies under its umbrella are SCB Abacus, an AI-driven fintech company, and Robinhood, a food delivery app.
And the bank is preparing for a significant reorganisation, which it anticipates will be discussed at the bank's Nov. 15 extraordinary general meeting of shareholders. It intends to convert to a holding company in order for the majority of its subsidiaries to operate largely free of banking regulations.
Bitkub, which was founded in 2018, will be acquired by SCB Securities, the bank's stock brokerage arm.
"Bitkub has achieved a significant milestone by becoming an integral part of Thailand's digital economy infrastructure," said Jirayut Srupsrisopa, founder and CEO of Bitkub Capital Group. "Bitkub is no longer a startup; it has evolved into a critical component of Thailand's financial infrastructure."
Bitkub was the 81st-largest digital asset exchange in the world as of Thursday, with a 24-hour turnover of $253 million, according to market tracker CoinMarketCap, which tracks over 300 exchanges.
Bitkub's rapid growth in trading volumes resulted in service outages in January, prompting Thailand's Securities and Exchange Commission to order the exchange to upgrade its technical infrastructure.
Despite these setbacks, it reported to the SEC a trading volume of 1.03 trillion baht for the nine months ended September, representing a roughly 92 percent market share in Thailand.
"After bringing Bitkub to a critical turning point, we needed to take it global, and so we turned to a strong partner like SCB to help us achieve our goal faster and more sustainably," Jirayut explained, citing SCB's customer base as a major selling point.
The agreement comes amid a difficult business climate for Thai banks, with profits squeezed as the country's central bank maintains a record low policy interest rate of 0.5 percent through May 2020 in response to the COVID-19 pandemic.
SCB reported a consolidated nett profit of 27.7 billion baht for the first nine months of 2021. While that was a 25% increase over the same period last year due to a coronavirus-related dip, it may still be difficult to reach the 40 billion baht annual profit seen prior to the pandemic.
Along with digital diversification, some Thai banks have looked overseas for new opportunities. Bangkok Bank, Thailand's largest lender by assets, acquired a 33.6 trillion rupiah ($2.2 billion) stake in Indonesia's Bank Permata in May 2020 for 33.6 trillion rupiah ($2.2 billion). Indonesia's benchmark interest rate is currently 3.5 percent.
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By Crypto PiratesSCB invests $535 million as it ramps up its fintech push.
Siam Commercial Bank, Thailand's oldest lender, is expanding its fintech footprint with the acquisition of a 51 percent controlling stake in local cryptocurrency exchange Bitkub Online for 17.85 billion baht ($535 million).
Bitkub's total valuation is estimated to be 35 billion baht ($1.05 billion) in the deal, making it the country's latest unicorn in an era when startups were considered scarce. The term "unicorn" refers to a private company with a market capitalisation of at least $1 billion.
The investment comes as traditional banks in Southeast Asia seek to modernise in order to compete with tech giants offering digital services such as consumer loans and electronic payments.
"Digital asset exchanges have exploded in popularity over the last few years and will continue to do so in the long run," said Arthid Nanthawithaya, the bank's CEO and chairman. "The move is consistent with SCB Group's strategy to transform into a financial technology company, addressing new consumer needs and entering a new competitive arena that will emerge rapidly over the next three to five years."
Investors reacted positively to the move, with Siam Commercial Bank's shares rising nearly 3.5 percent to 134.5 baht following the announcement. Bitkub coin, the startup's cryptocurrency, increased 180 percent in value to $2.78 from $0.99, according to market tracker Coincost.
The bank anticipates completing the acquisition in the first quarter of 2022, pending approval from the Bank of Thailand and the country's Securities and Exchange Commission.
SCB is well-known for its novel ownership structure. It was established in 1904 by Thailand's royal family, and King Maha Vajiralongkorn now owns 793 million shares, or nearly a quarter of the bank.
Thailand's fourth-largest bank in terms of assets already has a fairly diverse clientele. Among the companies under its umbrella are SCB Abacus, an AI-driven fintech company, and Robinhood, a food delivery app.
And the bank is preparing for a significant reorganisation, which it anticipates will be discussed at the bank's Nov. 15 extraordinary general meeting of shareholders. It intends to convert to a holding company in order for the majority of its subsidiaries to operate largely free of banking regulations.
Bitkub, which was founded in 2018, will be acquired by SCB Securities, the bank's stock brokerage arm.
"Bitkub has achieved a significant milestone by becoming an integral part of Thailand's digital economy infrastructure," said Jirayut Srupsrisopa, founder and CEO of Bitkub Capital Group. "Bitkub is no longer a startup; it has evolved into a critical component of Thailand's financial infrastructure."
Bitkub was the 81st-largest digital asset exchange in the world as of Thursday, with a 24-hour turnover of $253 million, according to market tracker CoinMarketCap, which tracks over 300 exchanges.
Bitkub's rapid growth in trading volumes resulted in service outages in January, prompting Thailand's Securities and Exchange Commission to order the exchange to upgrade its technical infrastructure.
Despite these setbacks, it reported to the SEC a trading volume of 1.03 trillion baht for the nine months ended September, representing a roughly 92 percent market share in Thailand.
"After bringing Bitkub to a critical turning point, we needed to take it global, and so we turned to a strong partner like SCB to help us achieve our goal faster and more sustainably," Jirayut explained, citing SCB's customer base as a major selling point.
The agreement comes amid a difficult business climate for Thai banks, with profits squeezed as the country's central bank maintains a record low policy interest rate of 0.5 percent through May 2020 in response to the COVID-19 pandemic.
SCB reported a consolidated nett profit of 27.7 billion baht for the first nine months of 2021. While that was a 25% increase over the same period last year due to a coronavirus-related dip, it may still be difficult to reach the 40 billion baht annual profit seen prior to the pandemic.
Along with digital diversification, some Thai banks have looked overseas for new opportunities. Bangkok Bank, Thailand's largest lender by assets, acquired a 33.6 trillion rupiah ($2.2 billion) stake in Indonesia's Bank Permata in May 2020 for 33.6 trillion rupiah ($2.2 billion). Indonesia's benchmark interest rate is currently 3.5 percent.
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