Bank CEO Prefers Saving Trees to Running His Empire

These days, the head of Thailand’s Kasikornbank Pcl spends much of his time saving trees in the remote province of Nan and promoting his romantic novel, rather than running the country’s second-largest lender in Bangkok.

“I have the forest to worry about," Banthoon Lamsam, who as chief executive officer took over 25 years ago from his father, said in a March interview at his teak home, built according to the influence of feng shui and characters from his 600-page book, on nine wooded acres near the Lao border where he’s moved his official household registration.

Yet back in Bangkok, it’s succession at the bank that’s cause for concern. Banthoon, 64, wants to retire. None of Banthoon’s three children wants to take over the bank, and it’s unclear which, if any, of the three presidents he has appointed will take his place.

“The succession issue can be very problematic given that this is a big bank with no clear plans on who will be the next leader,” said Yupana Wiwattanakantang, associate professor at the National University of Singapore’s Business School.

What does seem certain is that Kasikornbank will become the next of Thailand’s lenders to pass from family hands, leaving Bangkok Bank Pcl as the only major family-run bank not to have succumbed to the business pressures of modern finance and disobliging genealogy. Since the 1997 Asian Financial Crisis, many of Southeast Asia’s family banks have either been merged because of bad debts or sold to international players.

In the interview, Banthoon was sanguine about the prospect of handing over to an outsider, who would become the first non-Lamsam family leader since Kasikornbank was founded as Thai Farmers Bank in 1945.

“It doesn’t matter one bit,” said Banthoon, wearing a cowboy hat and giant, angular sunglasses while sitting in a covered patio at his Swiss-chalet house on stilts. “I didn’t want to run it. My father ordered me to run it.”

Tightening regulations and a changing industry mean skilled management and finance proficiency are more valued than the family connections of old.

“These days, banks do not only face domestic competitors, but also non-bank companies looking to take on their market share in financial services and payment systems, the likes of Alipay and Facebook,” said NUS’s Yupana. “It’s pivotal that banks’ leaders stay very close to the scene.”

Read More: Fintechs Spur Top Thai Bank to Create New Payments Platform

Banthoon gave up a dream to become a medical doctor and ended up finding banking interesting only when he focused on the challenges of management and organizational structure, he said.

“Enjoy? How do you define enjoy?” he said. “I am not very passionate about financial transactions.”

Kasikornbank was founded by Banthoon’s grandfather at the end of World War II in order to help Thailand, then known as Siam, rebuild its economy. Banthoon’s main achievement is having steered the bank through the 1997 crisis that wiped out a number of other Southeast Asian family-run banks and reduced the Lamsam family’s shareholdings. Their current level is less than 5 percent, spread among various family members.

Known as iconoclastic in his management style, Banthoon brought in foreign consultants, aggressively wrote off bad loans during the crisis, and introduced a performance culture for employees, who now number more than 20,000. Banthoon grew the bank’s assets from $14 billion to $79 billion as of 2016.

An investor who bought the bank’s stock 10 years ago would have seen a 236 percent gain through March from the investment, including dividends. That compares with a 197 percent return from the Thai benchmark stock index during the same period.

Banthoon said that despite spending much of his time in Nan, 560 kilometers (350 miles) north of Bangkok, he’s still responsible for the bank’s bottom line, yet leaves the bank’s day-to-day functioning to his managers. He plans to give up the CEO title when he has full confidence in a successor, he said.

“We are still at a critical juncture of the bank," he said. "I have to make sure it’s sustainable after I leave, not collapse after I leave."

Back at the bank headquarters, a 40-story glass and steel tower on the Chao Phraya River, there had been four presidents, all veterans with at least 20 years at the lender, handling daily operations. On April 3, one of them, Teeranun Srihong, 51, resigned by mutual agreement. A veteran of almost three decades at Kasikornbank, he had led the bank’s technology group prior to his departure, which was made public at the annual general meeting.

The remaining three presidents are Predee Daochai, 58, who handles risk management; Kattiya Indaravijaya, 51, who handles finance operations and human resources; and Pipit Aneaknithi, 49, who oversees international banking, including branches and offices in China, Cambodia and Laos.

For now, Banthoon isn’t ready to choose—nor say whether his successor will necessarily be among the three.

“It’s still too early to decide,” Banthoon said, noting that the presidents get paid the same salary and bonuses. “I am still assessing the situation every day. There’re so many elements for a good CEO.”

Succession probably won’t change the bank’s strategy, said Chief Investment Officer Adithep Vanabriksha at the Thai unit of Aberdeen Asset Management Plc, one of the top 20 shareholders in the bank.

“Our view is that succession planning is there, and their practice is to promote from within,” Adithep said in a phone interview. “And we believe in the current management team, rather than one particular executive.”

One difficulty Banthoon has in transferring power is that he’s also the bank’s chairman, a rarity for Thai banks. He assumed the chairmanship in 2013 when his uncle, Banyong, retired. The arrangement for the dual role came with a six-year permit from the Bank of Thailand, on the condition that Kasikornbank has a board of independent directors.

By the end of 2019, he will need to relinquish one of the titles. He will have stepped down down as CEO, though he may remain chairman “for a while,” he said. "I hope it’s not a long while."

Banthoon has been traveling to Nan province with increasing frequency since 2010, when he purchased a old wooden hotel in the capital city of Nan that he turned into high-end boutique lodging with rooms from about $60 to $100 a night. 

In 2013, he published his novel centering on a fictional local king that Banthoon said reflects his philosophy of life and similar personality, and could have been himself in a former life. A small second house on his property, with a dining area and shrine, is named Residence of Mafai, the fictional king’s much-loved consort whom he had executed after realizing she had performed black magic to win the king’s love from his eight concubines. Banthoon’s book jacket and a painting in his hotel both depict a scene from the tale. 

In 2014, he started his campaign to protect the local forest, engaging Princess Maha Chakri Sirindhorn, a sister of the current king, as well as the Thai prime minister, to raise awareness and halt deforestation through better land management.

At his chalet, Banthoon was busy preparing to host 800 attendees at a seminar on the Nan river and its forest. He said he hopes his presence in Nan can halt more encroachment of the forest. Nearly 30 percent, an area slightly larger than the U.S. state of Rhode Island, has been lost as villagers have cut down trees to grow corn for animal feed. Banthoon described the practice as “a very stupid trade-off” that damages the source of Thailand’s major rivers.

“The challenge is for me to be here before I get too old,” he said.

—With assistance from Supunnabul Suwannakij and Sunil Jagtiani.

Read more: https://www.bloomberg.com/news/articles/2017-04-10/bank-ceo-prefers-saving-trees-to-running-his-empire