Thailand's Financial Institutions Development Fund, a unit of the central bank, has sold its controlling stake in Siam City Bank to Thanachart Bank for 32 million baht ($978 million).

The FIDF bought a 47.58 per cent interest in SCIB in 1998, shortly after the 1997 Asian financial crisis, and then merged it with Bangkok Metropolitan Bank. The combination of Siam City Bank and TBank would create the fifth-largest bank in the country, in terms of assets and gross loans, with more than 800 branches, TBank said in a statement.

TBank, a Thai lender that is partly-owned by the Bank of Nova Scotia, won over four other international bidders, including HSBC. The offer for FIDF's stake represents an 8.3 per cent premium to the actual interest's closing share price on the Stock Exchange of Thailand in early February, when the bids were received, and implies a $2 billion enterprise value for SCIB. Market observers say there is possibility that the two lenders will eventually merge in the future, especially as Bank of Nova Scotia already owns one-fifth of SCIB.

Scotiabank, which owns 48 per cent of TBank, will contribute around C$650 million in cash for the transaction.