BANGKOK: Sumitomo Mitsui Banking Corp.’s customers in Thailand will soon be able to make deposits through branches of Bangkok Bank — a model the Japanese financial giant could use across Asia to grow its network at low cost. The two banks have inked an agreement letting customers deposit cash to accounts at SMBC’s Bangkok branch via the Thai bank’s roughly 1,150 locations. Around 2,700 Japanese-affiliated companies doing business in Thailand will be eligible for the service following a trial run started in June with retailer Aeon, travel agency H.I.S. and cosmetics maker Pola.
Companies in the retail, food service and other sectors handling large amounts of cash are envisioned as primary users. Check deposits will be accepted starting this fall. SMBC could make similar arrangements elsewhere in Asia if the system proves successful.
Until now, the Sumitomo Mitsui Financial Group unit’s business customers in Thailand have had to make deposits in person at the Bangkok branch, or transfer funds through local banks. Going straight to Bangkok Bank will help companies keep down costs and simplify money management. SMBC will pay its partner service fees. But more companies keeping their primary accounts at SMBC will mean more chances for the Japanese bank to profit from transactions such as loans and foreign exchange.
Japan’s Financial Services Agency has approved the arrangement, which is the first of its kind between a Japanese institution and overseas bank that have no capital ties. The model could catch on with other banks looking to create a stronger presence abroad without the costs of building branches or investing in a local institution. Such partnerships could also help skirt particularly tough financial regulations in Asia that have ensnared many a Japanese bank.
