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