The Thai government on Tuesday approved measures designed to encourage consolidation in the country's sluggish banking sector, ahead of a planned liberalisation of the industry which will increase foreign competition.
Among the proposals approved by the cabinet were the waiving of a tax levied on bank mergers. Foreign banks which already have operations in Thailand will also be permitted to operate more than one branch under the terms of the new plan.
Speaking to Reuters this week, Bank of Thailand governor, Pridiyathorn Devakula explained that the drive to increase consolidation within the banking sector will take place in two stages, the first of which will involve smaller finance firms, consumer finance companies and branches of foreign banks.
The second stage will involve mergers in the commercial banking sector. Thailand currently has thirteen commercial banks, four of which are owned by the state.
Reports have suggested that a merger is likely between two of the state-owned banks in this quarter, althought it is as yet unclear which institutions will be consolidating their operations.
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