DECEMBER 6, 1999 VOL. 154 NO. 22

The Banker Who Saved The King

By ROBERT HORN Bangkok

When King Bhumibol needs investment advice, where does he turn? To Chumpol NaLamlieng, according to some in the Thai press and financial communities. But the 52-year-old president of Siam Cement, the country's largest industrial conglomerate, insists it isn't so. "My meetings with His Majesty are infrequent and always formal," he says. Nonetheless, if it weren't for Chumpol, His Majesty might be quite a bit poorer these days.

The Harvard-educated, former World Bank loan officer has been credited with saving both Siam Cement and Siam Commercial Bank. The two are no ordinary companies. They are the jewels in the Crown Property Bureau, investment arm of the royal family. No one is sure exactly how much wealth the family has, but estimates range from $2 billion to $8 billion, most of it in land and stocks.

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As he does with politics, King Bhumibol generally stays above business, not intervening in the day-to-day affairs of the bureau--thus lending credence to Chumpol's claim he's not phoning in stock tips to the palace. Nonetheless, the executive does advise the bureau, and so indirectly helps guide the king's investments. The bureau's director, Chirayu Issarangkul Na Ayuthaya, says that it "has always acted as an investor in the development of Thailand rather than as an investment banker," choosing projects "which are deemed to have national or social contributions." Its empire, however, is built around Siam Cement and Siam Commercial, the only two companies in which the bureau is the major shareholder.

Both were battered by the Asian financial crisis. Siam Cement posted a $1.19 billion loss in 1998 and racked up $4 billion in debt. "They made the same mistakes as everyone else," says Philip Adkins, chief of research at Seamico Securities in Bangkok. "But Siam Cement has the best management of any Thai industrial company. They went right ahead and restructured." The firm sold off non-core businesses, using the proceeds to lower its debt and invest in nine remaining subsidiaries. Siam appears to be on the road to recovery.

The Crown Property Bureau was so impressed with the rescue that it sent Chumpol over to Siam Commercial, which was buckling under nearly $5 billion in nonperforming loans. Massive recapitalization was needed, but investors were sour on Thai banks in general, and Siam Commercial in particular, because of poor management and suspicious balance sheets. "We needed to get our house in order," says Jada Wattanasiritham, the bank's new president. Under Chumpol's guidance, accounting practices were cleaned up, information technology was improved and asset valuations made more realistic. Adkins credits Chumpol with "the first reengineering of a major bank in post-crisis Thailand. The more than 30% reduction in nonperforming loans speaks for itself. He restored the bank's image."

Investors agreed: the bank's $1 billion global equity offering in April, the first major attempt at recapitalization by a Thai bank, was oversubscribed. Of course, being known as the King's bank didn't hurt. Says Chumpol: "I'm sure investors were confident they would get fair treatment from the royal family."

So was the monarch pleased with the manager's work? "I think it's fair to say His Majesty is not very concerned with material things," says Chumpol. "Going after a profit is not the first priority. He stresses that what we do should always be ethical and for the benefit of the Thai people."