Four major Thai banks have made the decision to close their branches in Laos, citing stricter regulations and decreased business activities as the primary reasons for their withdrawal.
The banks include Thai Military Bank, Bank of Ayudhya, CIMB Thai Bank, and Bangkok Bank. The group said tighter regulations imposed by the Lao authorities, particularly in areas such as lending and foreign exchange management, have hampered the ease of conducting business in the country.
Additionally, over the past three years, foreign commercial banks were required to raise their minimum registered capital from 100 billion kip to 300 billion kip per branch, resulting in elevated operating costs.
The decline in business activity, especially in cross-border trade and investments between Thailand and Laos, has further contributed to the decision to close these branches. Many Thai corporations, which had been the primary client base for these banks, have discontinued their operations in Laos. The four Thai banks have reassessed their business strategies and opted to shut down branches that were not meeting targeted returns, in an effort to manage expenses.
While concerns about inflation and the depreciation of the Lao kip have been acknowledged, these issues have taken a back seat compared to the perceived regulatory risks and the dwindling business activities. However, other major Thai banks such as Bangkok Bank, Krungsri (Bank of Ayudhya), Krungthai Bank, Siam Commercial Bank, and Kasikornbank continue to operate in Laos.
KBank has identified business opportunities in neighboring countries, particularly in relation to China’s investments in infrastructure projects like the China-Laos railway. The bank remains focused on serving large Thai corporations and mid-sized enterprises in Laos, with a portfolio that includes local currency fund transfers to facilitate cross-border trade and mitigate foreign exchange risks. (NNT)
