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Bangkok Bank to become Southeast Asia's 6th-largest lender on Bank Permata deal

Bangkok Bank PCL will move up one spot and become the sixth-largest lender in Southeast Asia in terms of total assets after acquiring an 89.12% stake in Indonesia's PT Bank Permata Tbk, according to data compiled by S&P Global Market Intelligence.

The Thai lender's total assets will rise 10.4% to about US$116.43 billion, based on June-end figures, after buying the stakes from Standard Chartered Bank and PT Astra International Tbk for an estimated total of 37.431 trillion Indonesian rupiah. Subject to shareholder and regulatory approvals, the transaction is expected to close in 2020, after which Bangkok Bank will launch a mandatory tender offer for the remaining 10.88%.

Bangkok Bank, with US$105.49 billion of assets as of end-June, is behind some of the region's largest lenders such as DBS Group Holdings Ltd., Oversea-Chinese Banking Corp. Ltd. and United Overseas Bank Ltd. The Thai bank plans to strengthen its regional position through the acquisition of the 12th largest bank in Indonesia by total assets.

Following the acquisition announcement on Dec. 12, Moody's placed Bank Permata's ratings on review for upgrade while affirming its ratings of Bangkok Bank. Following the transaction, Moody's said it expects Bank Permata will receive extraordinary support from Bangkok Bank in times of need. Bangkok Bank's stand-alone credit profile, as reflected by its solvency and liquidity, is broadly expected to remain stable. However, the proposed acquisition will weaken its capitalization because it plans to fund the purchase with internal resources and funding sources other than new equity.

Fitch Ratings, however, placed the national long-term rating of Bank Permata on Rating Watch Negative and affirmed its national short-term rating. Fitch said that this reflects the possibility of lower institutional support from Bangkok Bank compared with Standard Chartered Bank. Meanwhile, Fitch affirmed its ratings of Bangkok Bank with a stable outlook based on the bank's stand-alone credit profile.

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As of Dec. 23, US$1 was equivalent to 13,976 Indonesian rupiah.