Asia: Tisco Bank seeks to enter the mortgage market following acquisition deal with Standard Chartered Bank Thai

Tisco bank, established in 1969, recently acquired Standard Chartered Bank Thai’s (SCBT) retail banking business. The acquisition is expected to strengthen Tisco’s own retail banking business as well as potentially increase its customer base.

The acquisition deal between Tisco Bank and SCBT will see about 7 billion baht in personal loans, 5 billion in business loans, 25 billion in mortgages, 6 branches of SCBT, 300,000 retail customers and 100,000 affluent clients transferred to Tisco Bank.

As part of the deal, SCBT will help to manage the business for one year after the asset transfer is complete. President of Tisco Bank, Sakchai Peechapat, said that SCBT’s current housing loan rate is competitive and has a loan-to-value (LTV) ratio that is lower than the industry range of 90-120%. Essentially, a lower LTV implies less risk for both the lender and recipient as a smaller amount is being borrowed.

Tisco Bank’s entry into the mortgage market comes at a time where the four big lenders recently cut their minimum retail rate however they are confident of their competitive edge.

SCBT’s MortgageOne allows homebuyers to combine their savings, deposits, current accounts and home loans into one account. The deposits in the account can then be used to offset the principal amount so that the interest is paid on a smaller principal amount. Effectively this can be interpreted as a lower interest rate and according to RFi Group data, 43% of home loan holders stated that the interest rate is the most important factor when selecting a home loan. Tisco Bank’s entry into the mortgage market comes at a time where the four big lenders recently cut their minimum retail rate however they are confident of their competitive edge.

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