BANGKOK: It’s only fitting that Thailand’s second-largest bank pipped a Japanese rival to buy a lender in Indonesia. The elixir of youth is a great attraction to those who no longer have it.
Just like in Japan, the ageing Thai population is propelling the economy into long-term stagnation, leaving the likes of Bangkok Bank Pcl with no choice except to seek their fortunes in younger societies bubbling over with credit demand at juicy yields. Hence, the US$2.7bilbid for 90% of Indonesia’s PT Bank Permata.
Since Astra is Toyota Motor Corp’s Indonesian partner and controls half of the car market, it seemed logical that a Japanese institution would want to get into the driver’s seat at Permata, a specialist auto financier. As I’ve noted before, Thailand’s per capita income is a fifth of South Korea’s, 73% less than Taiwan’s, and a third lower than Malaysia’s, but its outbound-to-inbound investment ratio of 1.9 is higher than all three. Thai demographics are also among the worst in the world. With a fertility rate of 1.5 live births per woman, far lower than the replacement rate of 2.1, it now appears that the small-family drive begun by activists like Mechai Viravaidya, known as Mr.
Bangkok Bank shareholders are a little miffed about the overseas shopping expedition. Their dividend checks could be at risk. But the draw of a young market where large banks still earn a 15%-plus return on equity, the best in Asia, is compelling. Permata is not in the league of a PT Bank Rakyat Indonesia or a PT Bank Central Asia, but as Japanese lenders like Mitsubishi UFJ Financial Group Inc. know only too well, you try to get a foot in the door in Indonesia when it opens even a little.
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