The Finance Ministry is gearing up for a fresh capital injection to retain its TMB Bank shareholding in the event that a proposed amalgamation of TMB and Thanachart Bank (TBank) comes to fruition.
If the ministry's stake in the new entity created after the amalgamation is diluted, the ministry is ready to exercise its rights to subscribe to newly issued shares to maintain its shareholding, said Lavaron Sangsnit, director-general of the Fiscal Policy Office.
The Finance Ministry is the largest shareholder in TMB, with a 25.9% stake, while ING has a 25% stake.
Finance Minister Apisak Tantivorawong said recently that TMB had received multiple merger and acquisition (M&A) offers from financial institutions such as TBank and Krungthai Bank, but all the offers were in the initial stages of negotiations and none had reached a conclusion.
Mr Lavaron said the State Enterprise Policy Office (Sepo) will take responsibility for seeking funding sources for subscribing to newly issued shares and could dispose of its stakes in some companies to do so.
In practical terms, the Finance Ministry is throwing support behind the amalgamation because it could make the new bank stronger than TMB and TBank are now and the larger scale will lower investment costs, particularly for IT systems, he said.
SET-listed TMB is the country's seventh-largest bank, with assets of 873 billion baht, while TBank is sixth and had assets worth 1 trillion baht at the end of last September, according to Stock Exchange of Thailand data.
TMB has been a topic of M&A speculation for months since the cabinet last April approved a royal decree on tax deductions and exemptions to encourage mergers among Thai banks and create "champion" banks able to compete with foreign banks.
An informed source at the Finance Ministry said the merger is under negotiation between the two banks and a plan has not been submitted to the Finance Ministry.
