Speculation about a deal between CP All Plc and Land and Houses Bank (LH Bank) has flared up again, resulting in the bank's share price leaping 3.03% yesterday.
Shares in LH Financial Group, its parent firm, peaked at 2.18 baht yesterday on the Stock Exchange of Thailand (SET) to close at 2.04 baht in turnover of 656 million baht.
CP All, the 7-Eleven convenience store operator, is interested in buying a stake in LH Bank as a way of getting a banking licence to expand into microcredit through its extensive store network.
Its share price fell by 0.6% to close at 41.25 baht in trade worth 261 million baht.
Local media yesterday reported CP All had agreed to buy a 51% stake in LH Bank, while the remainder would be shared between existing shareholders.
The report also cited a source from a commercial bank as saying the bank would raise its registered capital after details were agreed next month. It also stated CP All would be the largest shareholder and gain full management control.
LH Bank came out to file a statement to the SET denying the report, saying it was "unaware of the matter".
However, executives of the bank and CP All were unavailable for comment.
A person familiar with the matter also denied the most recent speculation and said it had no grounds. "Someone is cooking up something again," said the source. "I don't think people who are in the working team on the deal are aware of this. The Bank of Thailand and authorities heard the speculation also."
The deal was proposed in late 2013, when LH Financial Group's major shareholder and CP Group executives held discussions over the possibility of the retailer buying the LH Bank stake and taking control of the bank.
The speculation caused the share prices of both companies to fluctuate last year.
Late last year, CP Group chairman Dhanin Chearavanont confirmed his company was interested in buying LH Bank and that talks had been held, but he said a deal had not been settled because the group had no experience in banking.
Furthermore, it was not clear whether the central bank would allow CP All to conduct microfinance lending and deposit activities.
Bank of Thailand governor Prasarn Trairatvorakul cast doubts over the capability of CP All to carry out banking.
"If CP All wants to conduct deposit banking activity, then the central bank must hold the deal and make a further assessment," Mr Prasarn said last November.
"If the company's gearing ratio equals zero and it plans to use its own capital for its lending business, then the central bank will allow such a move."
Anant Asavabhokhin, the major shareholder in Land and Houses Plc, the biggest shareholder in LH Financial Group, last December said it was ready to offer a significant stake to potential strategic partners. The Asavabhokhin family, founder and major shareholder of property companies Land and Houses and Quality Houses, owns about 75% of LH Bank.
