The proposed merger of TMB Bank and Thanachart Bank (TBank) has yet to be submitted to Finance Minister Apisak Tantivorawong for consideration.
The Finance Ministry wants to see mergers in the local banking industry to create larger, more competitive banks, Mr Apisak said.
Earlier, the ministry and TBank acknowledged that the two banks' major shareholders were studying a possible amalgamation of TMB and TBank.
The Finance Ministry is the largest shareholder in TMB, with a 25.9% stake, while ING has a 25% stake. In TBank, Thanachart Capital Plc holds a 51% stake and Canada's Scotiabank owns the rest.
TMB is the country's seventh-largest bank, with assets of 873 billion baht, while TBank is sixth with assets worth 1 trillion baht at the end of September.
TMB has been a topic of M&A speculation for months after the cabinet last April approved a royal decree on tax deductions and exemptions to encourage mergers among Thai banks and create large "champion" banks that can compete with foreign banks.
Prapas Kong-Ied, director-general of the State Enterprise Policy Office, said recently that talks on a potential merger of TMB Bank and TBank, including the possibility that the Finance Ministry would inject fresh funds to maintain its shareholding in TMB, were expected to conclude by the end of January.
The Finance Ministry will consider how much benefit shareholders are likely to gain from the proposed merger, Mr Apisak said.
For TMB's planned recapitalisation, which is a part of the merger plan, Mr Apisak said the Finance Ministry will consider whether it would see a greater benefit from the capital increase before making a decision to inject fresh funds into the bank.
The Finance Ministry cannot approve TBank's request for a tax exemption when integrating the bank's subsidiaries into the consolidated entity, as the royal decree on tax deductions and exemptions offers the tax waiver only to financial institutions that merge and such tax incentives do not extend to subsidiaries, Mr Apisak said.
