Crypto Deal Delay Casts Doubts Over Oldest Thai Bank’s Makeover

A delayed deal between Thailand’s oldest bank and its largest cryptocurrency exchange is raising doubts about the 115-year-old financial group’s ambition to become a regional fintech powerhouse

Bangkok-listed SCB X Pcl agreed to acquire a majority stake in Bitkub Online Co. for 17.9 billion baht ($490 million) at the peak of crypto craze in November, with a target to wrap up the deal earlier this year. But SCB last week there’s still due diligence to be carried out amid discussions with regulators. 

Thailand’s cryptocurrency industry is facing heightened regulatory scrutiny just as SCB attempts a push to become a market leader in digital assets. Falling fees and rising competition within traditional banking businesses are forcing lenders to develop new markets within Southeast Asia’s second-biggest economy and further afield. 

“Bitkub is a key step for SCB to achieve its expansion into digital asset and fintech businesses,” said Therdsak Thaveeteeratham, an analyst at Asia Plus Securities Pcl. “The delay further raises doubt about the deal completion. This would be a significant blow to SCB’s regional tech ambition.”

Bitkub and its chief executive officer last month were by the Securities & Exchange Commission for creating “artificial trading volume” on its platform. In May, the company and five officials were also fined by the regulator for breaching guidelines in listing the company’s own digital coins. 

Meantime, the global crypto market is contending with a $2 trillion crash and a slew of high-profile bankruptcy filings. Bitcoin, the world’s biggest token, is down more than 70% from its peak in November. Crypto lender Celsius Network and broker Voyager Digital Ltd. filed for Chapter 11 bankruptcy, while liquidators have been called in for bankrupt crypto hedge fund Three Arrows Capital.

“The biggest concern now is the depressed cryptocurrency trading worldwide,’ said Nares Laopannarai, the secretary general of the Thai Digital Asset Association. “Coupled with some tax and regulation issues, this has made most investors and participants more cautious about the crypto market.”

No Deadline

SCB hasn’t given a new completion deadline for the proposed takeover of Bitkub. 

Still, for SCB, which counts Thailand’s King Maha Vajiralongkorn as its biggest shareholder, the setback to the pending Bitkub deal is unlikely to derail the group’s expansion into fintech, according to Bloomberg Intelligence. The group saw broad-based digital adoption in the first quarter for users, loans and revenue, a recent Bloomberg Intelligence showed. 

“SCB may continue to focus on high-growth fintech business,” said Rena Kwok, a Bloomberg Intelligence analyst. “Its peer-leading digital transformation and foray into high-growth fintech space could offer medium-term earnings drivers.”

SCB shares are down about 16% since they began trading in April after a successful stock-swap offer for the previously-listed entity called Siam Commercial Bank Pcl. They have trailed peers such as Bangkok Bank Pcl, Kasikornbank Pcl and Krung Thai Bank Pcl.