Updated: Big deals for the Crown Property Bureau

In a somewhat bland Bangkok Post article it is reported that the “Crown Property Bureau’s shareholding in Siam Commercial Bank (SCB), Thailand’s third-largest bank by assets, has declined by 3.33%…”.

That amounts to about 17 billion baht or more than half a billion dollars.

The CPB remains the bank’s largest shareholder after the transaction on 2 October. There were few other details.

SCB shares fell every day following the transaction in a market that reached a 24 year high.

The Post provided no other detail or any analysis suggesting fear at work.

Sure enough, a Reuters report suggests murky trading. It states that the shares “have been transferred on behalf of King Maha Vajiralongkorn from the Crown Property Bureau…”.

The report adds that the Securities Commission “filing by the Crown Property Bureau did not identify the ultimate beneficiary of the shares, nor did it indicate if any money had been paid for the shares.”

This is an odd “transaction.” It may have been a sale, but we don’t know. (PPT could not locate the announcement at the SCB website or those of the Securities and Exchange Commission or the Securities Exchange of Thailand.)

Reuters states that the CPB confirmed the transaction but declined comment further. An official reportedly said: “It is his majesty’s private affair so I cannot comment further…”.

The SCB also “declined to comment on the transaction in its shares.”

That’s odd for a publicly listed firm and will probably worry some institutional investors. If we were SCB shareholders we’d be very concerned about this lack of transparency. After all, SCB is supposed to be a public company, not a royal plaything.

This isn’t the only recent deal that lacks transparency. Back in late 1994, there was a deal done to buy most of Kempinski, the hotels company. The annual report for that year stated:

It was the SCB that headed up this takeover, with its chairman becoming the chair of Kempinski. When the economic crisis hit, Dusit Thani “sold its share of Kempinski Hotels to its partner, the Siam Commercial Bank…”. Exactly how this was done is unclear as the SCB was struggling at this time.

In a remarkably opaque statement at the Kempinski website, it is stated:

In 2004, the Thailand Crown Property Bureau took over a majority holding in Kempinski AG, which enabled the company to extend its portfolio even further by means of a global expansion strategy and to develop new markets.

How the CPB obtained Kempinski from SCB is unclear. The same site then adds, equally opaquely:

After 13 years, in February 2017, the two existing shareholders formalised previous plans for an equity transfer between them and the majority shares are now held by the existing Bahraini-shareholder while the shareholder from Thailand now owns a minority.

Some say the “equity transfer” was worth one billion Euros. That means about $1.6 billion in two known but opaque deals in 2017. These coincide with the king’s formal expansion of his power over royal loot.

Update: The Nikkei Asian Review states that it is King Vajiralongkorn who “has personally become a major shareholder in Siam Commercial Bank (SCB) following the transfer this week of shares held by the Crown Property Bureau (CPB) valued at about $500 million.” It adds: “report filed with the SEC by the Crown Property Bureau, it was stated that the 3.33% holding had been transferred to King Vajiralongkorn, but there was no indication as to whether there was any payment for the stake.”

The motivation for such a transfer remain unclear.