* Move to extend Taiwan bank expansion in SE Asia * LH Financial shares jump as much as 4.7 percent * Thai firm seeking partner to expand bank business (Recasts with confirmation for Thai LH Financial, details) By Faith Hung and Khettiya Jittapong TAIPEI/BANGKOK, March 29 (Reuters) - CTBC Financial Holding Co, the parent of Taiwan’s biggest credit card issuer, has agreed to buy a 35.6 percent stake in Thailand’s LH Financial Group for 16.6 billion baht ($469 million), the two companies said on Tuesday. The deal, expected to be completed late in the third quarter, marks the latest expansion by Taiwan’s banks, which have been moving into China and Southeast Asia to diversify revenue away from their competitive home market. Proceeds of the deal, which is subject to regulatory approval in both Taiwan and Thailand, will be used to expand LH Bank’s business in digital banking, wealth management and trade finances, CTBC said in a statement. Shares in LH Financial jumped as much as 4.7 percent to a 13-month high after Reuters reported the talks earlier in the day. Under the deal, LH Financial will offer 7.55 billion new shares to CTBC at 2.2 baht each, a 9 percent premium to market price. LH Financial shares closed at 2.02 baht on Tuesday. The companies said they would sign the deal after due diligence is done. CTBC will become the biggest shareholder in LH Financial while the holding of the top two shareholders Land & Houses and Quality Houses will be diluted to 21.9 percent and 13.7 percent respectively, the Thai firm said. CTBC has previously said it wants overseas banking revenue to grow to 50 percent of total revenue in five years from 36 percent now. It currently has 100 overseas branches, offices and subsidiaries, with Southeast Asia a major focus. Last year CTBC agreed to buy CITIC Bank International (China) Ltd for T$11.67 billion ($381 million), and said its brokerage unit would set up a joint venture brokerage with two state-backed Chinese partners in China. In 2014 CTBC acquired Japan’s Tokyo Star Bank for around $510 million. “After its acquisition of the subsidiary of CITIC International in Shenzhen and Tokyo Star Bank, we believe CTBC’s target is to build a regional bank in Asia,” Macquarie analyst Dexter Hsu said in a note to clients. Fubon Financial, another major Taiwanese financial holding firm, is also eying stakes in banks in Indonesia and Thailand, banking sources have said. Fubon has declined to comment on specific cases. Meanwhile LH Financial has long sought a partner for its banking unit, a provider of housing loans and one of Thailand’s smallest lenders, to boost its electronic banking and fend off fierce competition. LH Financial reported a net profit of 1.65 billion baht in 2015, up 38 percent on the year. It had assets of about 198 billion baht at the end of February, according to data from the Thai stock exchange. ($1 = 35.3400 baht) (Additional reporting by Saeed Azhar in SINGAPORE; Editing by Kenneth Maxwell and Susan Fenton)
CTBC Financial is in talks to buy up to a 40% stake in Thai company LH Financial Group's banking unit; the deal would be a non-binding proposal worth $450m. This marks the latest expansion by CTBC in China and Southeast Asia as it looks to diversify revenue sources beyond its competitive domestic market.