The tender offer for Bank of Ayudhya (Krungsri): an Asian commercial-bank base (2013)

Handing over a branch to secure a local base

What sets this decision apart from ordinary overseas expansion is that, rather than extending the corporate business it already had, MUFG bought the local bank itself — one that held the deposits and loans of individuals and small and mid-sized firms. It did not carry in its technology or its products; it took in, whole, the customer base of a growing Thai market. And to comply with Thailand’s one-bank rule, it went so far as to hand its own Bangkok branch — among the largest in the country by assets — over to the bank it had bought, so as to fold everything into a single institution. Few deals have given such clear shape to the choice of moving the place where money is earned into an overseas growth market.

That said, a strategy of buying a bank in a growth market at a high price takes on the dangers of currency, credit and regulation. A weak baht erodes profit once converted into yen, and a slowdown in the Thai economy could swell non-performing loans. The figures ten years on hint at success, but the true verdict will be set by whether the whole body of investments — including later acquisitions such as Bank Danamon in Indonesia — can make up for thinning earnings at home. In the drift by which the overseas breadwinner moves to Asia, this deal remains the first large-scale instance to announce that shift.