HSBC Holdings, Standard Chartered and CIMB Group are among the potential bidders for a 42 percent stake in BankThai, which has become unprofitable and is partially owned by US buyout firm TPG Inc, five people familiar with the situation have said.

Despite its current stake in the Thai bank, TPG also plans to bid for the 42 percent stake owned by the nation's central bank, according to the sources, who asked to remain anonymous.

Potential buyers were asked to submit final offers by the end of this week, the sources said.

The new investor may help BankThai - with a market value of $260 million - move its operations back into the black and expand its branch network. It recently posted its biggest annual loss in eight years, following a huge writedown from collateralized-debt obligation (CDO) investments.

Acquisition of the stake would give its buyer a stronger foothold in the Thai economy, which is expected to grow as much as 6 percent in 2008. That would be its fastest growth in four years.

Sukkawat Prasertying, a chief investment officer at Manulife Asset Management Co, said a partnership with a new foreign partner should be positive for BankThai.

"The bank needs another restructuring," the officer said. "Thailand is still attractive to foreign banks because its economic fundamentals are not that bad and remain very sound."

The Thai government limits overseas banks to operate one branch in the nation, forcing them to rely on acquisitions for expansion. BankThai is the smallest of the country's four State-controlled banks.

Officials at BankThai, HSBC and CIMB declined to comment, while Standard Chartered said it's seeking opportunities.

"We accept that BankThai has problems," Finance Minister Surapong Suewonglee told reporters in Bangkok on June 6.

"These problems have been widely known. Anyone who wants to buy a stake should know about it."

BankThai raised money twice in the past 10 months by selling shares to a central bank unit and the Asian division of TPG. BankThai lost 6.93 billion baht (HK$1.64 billion) in 2007 after its CDO investment hit $310 million - the most among Thai banks. BankThai has 146 branches.

"There are people visiting us for due diligence," said Sutee Losoponkul, BankThai's executive vice president, in Bangkok. He declined to disclose the identities of potential investors.

Standard Chartered, the London-based bank that opened a branch in Thailand 114 years ago, bought 75 percent of Nakornthon Bank for 12.4 billion baht (HK$2.93 billion) in 1999 and purchased the rest in 2005.

Standard Chartered has 38 branches in Thailand and plans to add more, Bangkok-based spokeswoman Pratamaporn Svasti-Xuto said in an e-mailed response to questions.

Bloomberg

(HK Edition 06/10/2008 page2)