KBank's Strategic Acquisition in Muang Thai Group Holding
K
KASIKORNTHAI
ธนาคารกสิกรไทย
开泰银行 KASIKORNBANK
KBank and MTL Enter the 10 Years Bancassurance Agreement
■This transaction is a connected transaction, per Thai regulations, as it is conducted with MTL, a subsidiary which
KBank effectively holds 38.25% shares. This transaction does not require shareholder approval at the
Shareholders' Meeting as it is a normal business transaction conducted with general trading conditions.
■ KBank deems this transaction as a very important transaction. As such, KBank wants to solicit shareholder
participation in the decision so as to enhance transparency and be consistent with good corporate
governance practices.
■KBank's Board of Directors resolved to submit the transaction for shareholder approval at the Extraordinary General
Meeting of Shareholders on August 26, 2021, and the Extraordinary General Meeting approved the transaction.
■KBank views the continuity of distributing the life insurance products of MTL according to this new Bancassurance
Agreement, will:
Provide maximum benefits to KBank's overall insurance business value;
Provide more favorable conditions and greater benefits to KBank;
Continue the cooperation through a 10-years relationship with MTL, a leading life insurance company;
Cause no disruption in business operations with MTL and services provided to KBank customers.
■KBank appointed three external independent advisors to provide opinions on the transaction.
■ Key transaction summary of this exclusivity bancassurance agreement :
KBank will receive payment of Bt 12.7 bn and annual performance bonus, in return for distributing MTL's life
insurance products, health and critical illness insurance products.
Amortization of BA agreement value (Bt 12.7 bn) and performance bonus will be recorded in non-interest
income in Bank only financial statement and in non-controlling interest in consolidated financial statement.
บริการทุกระดับประทับใจ
K
KASIKORNTHAI
Total Economic Value
■ KBank still effectively owns 38.25% of MTL's
equity. Bilateral negotiation is a balancing act.
Sales Channel Value
Company Value*
+
1
ธนาคารกสิกรไทย
开泰银行 KASIKORNBANK
Impacts on Income Statement
Bancassurance Agreement has impacts on
following components in the income statement:
KBank (Bank only):
Non-interest income: + Bt 1,270 mn (average payment per year)
+ Performance Bonus
MTL:
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Commission
Non-contingent Performance
Bonus
Bancassurance
Exclusivity Value
KBank's Share
in MTL Equity
(38.25%)
*Non-listed company
Potential destruction to our economic value
caused by MTL having to find other sales channel
replacement is high. Better value accretion can
be achieved through this business alignment.
■ We considered the overall economic value to
KBank from both sales channel value and
company value i.e. if sales channel value
increases, company value will decline.
Non-interest expense: + Annual Payment
Consolidated KBank:
Non-controlling interest: 61.75% x annual payment after tax
Consolidated net profit: 61.75% x annual payment after tax
If NPE improves from this arrangement, KBank's
consolidated income and MTL's NPE will rise.
Note:
•
Annual payment = Bt1,270 mn (average payment per year) + performance bonus
NPE = Net Premium Earned
An average payment per year of exclusivity fee has been recognized on a
monthly basis, starting from January 1, 2022 onwards.
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