Bangkok Bank offers first full custodian service for investors in Laos
Bangkok Bank offers first full custodian service for investors in Laos
The Lao Securities Commission Office (LSCO) last week has granted Bangkok Bank a licence to operate full custodian services in Laos.
The bank's Vientiane branch is the first institution to hold such a licence in Laos. Its complete range of services includes safekeeping, settlements and processing, as well as managing assets for investment in the Lao Securities Exchange (LSX).
LSCO Director General, Saysamone Chanthachack said that at present the LSX had four listed companies with trading value of about US$100,000 a day. The market has about 10,000 accounts, up to 2,000 of which are foreign investors from 30 countries. The LSCO hopes these nu mbers will expand quickly as foreigners take advantage of Bangkok Bank's custodian service.
The LSX was established in December 2010 and started operating the following month.
“Before they had access to a custodian bank, most foreign investors had to deposit their shares with brokers. It was also difficult to invest foreign funds in the LSX. As a result, we have tried to develop our system to support the capital market so it has sustainable growth in long term,” Saysamone said.
Meanwhile, the LSX hopes to list about three more companies this year, while encouraging other banks and financial institutions to open custodian busine sses. Two or three firms are applying for custodian licences, she said.
Bangkok Bank senior vice president Benjawan Vichitthanarurk, also manager of its securities services department, said the bank planned to offer custodian services at i ts branch in Vietnam, but this might take a year or two to set up.
“In Laos, we started to negotiate with the LSCO in 2012, so it took three years before we got this licence. We cannot estimate the income from this business at this time, but it will challenge the bank to expand its business in CLMV countries for the long term,” she said, referring to Cambodia, Laos, Myanmar and Vietnam.
At present, Bangkok Bank has only one branch in Vientiane. Last year, it recorded new loans worth US$35 million and deposits of US$97 million. It aims to double those figures this year, branch manager Chadaphorn Uratchat said.
Besides the custodian business, Bangkok Bank is also interested in expanding its securities business into Laos as the number of listed companies grows, executive vice president Chaiyarit Anuchitworawong said. The custodian business should help facilitate that, because of some of its customers are also interested in listing on the LSX in the next few years.
He added that the bank also planned to open two new branches in CLMV countries this year, one of them in Pakxe, Laos, and the other in Yangon, Myanmar.
Pornsant Hathirat, managing director of BCEL-KT Securities Co, said Bangkok Bank's custodian service would be a draw for foreign investors, especially funds, to the LSX. Earlier, foreign funds could not invest in the LSX because of the lack of custodian services in Laos.
BCEL-KT Securities Co is a joint venture between Banque pour le Commerce Exterieur Lao and Thailand-based KT Zmico Securities Co.
