KBANK TAKES FACTORING FROM UNIT

       Kasikornbank will take over the factoring portfolio of its subsidiary Kasikorn Factoring Co, leaving KFactoring with only a machinery and equipment leasing business.
       "Usually K-Factoring's customers also use other financial services of Kasikornbank, so once the factoring portfolio is transferred to the bank, customers will receive more flexible pricing offers. Besides they can share their assets as collateral with other financial products," president Prasarn Trairatvorakul said yesterday.
       KBank aims to become the king of the factoring business by expanding its market share to 30 per cent in 2011 from 21 per cent currently.
       The factoring business worldwide has ballooned by an average of 27 per cent a year over the past five years.
       The bank found that the local facฌtoring business had become increasฌingly interrelated with the bank's foreign business.
       However, K-Factoring did not hold a foreignexchange licence, so the bank, which can conduct a foreignexchange business, would operate this service on its own in order to expand the business.
       Besides, KBank's service channel also has been broadened with 60 foreign business centres nationwide that can offer factoring.
       The factoring industry, now about Bt100 billion, has been growing at 12 per cent per year during the past five years, faster than the banking industry's growth rate of 9 per cent a year.
       KBank's customer base is expected to gain about 20 per cent after the transfer.
       Machinery and equipment leasing still has strong potential because industry is growing rapidly in Thailand. Last year machinery and equipment purchases reached Bt600 billion.
       However there are not many machinery and equipment financing firms, so the bank would partner up with machinery and equipment suppliers in order to expand its leasing portfolio.
       Pannee Lertchanyakul, managing director of K-Factoring, said three financing plans were available - hire purchase, financial lease and operating lease. Under hire purchases, customers could take ownership of their machine after the instalment period.
       Under financial leases, they could choose to own the asset or return the asset to the company.
       Under operating leases, they would not be allowed to own the asset.
       KFactoring's machinery leasing portfolio runs Bt2.2 billion, equal to the factoring portfolio, but the size of the overall business is about Bt23 billion per year.
       The company expects its leasing business to double next year and reach Bt7 billion-Bt8 billion in three years, handing it the market crown.