Thanachart Bank acknowledges that its major shareholders are studying a possible amalgamation with TMB Bank but no conclusion has been reached yet, says TBank's newly appointed chief executive.
The bank's major shareholders began studying the benefits of a possible merger or acquisition after the cabinet approved tax incentives for banking integration, said Praphan Anupongongarch, who took the helm on Jan 1.
Praphan: Studying benefits of merger
Thanachart Capital Plc (TCAP) holds a 51% stake in TBank, and Canada's Scotiabank owns the rest.
A source familiar with the matter said that the planned amalgamation would take time because TBank has many subsidiaries.
According to TBank data, it owns the entire stake in Thanachart Securities, Thanachart Insurance, Thanachart Group Leasing and RTN Insurance Broker, and lion's shares of Thanachart Fund Management and Ratchthani Leasing Plc.
Finance Minister Apisak Tantivorawong said recently that TMB had received multiple M&A offers from financial institutions such as TBank, but all the offers were in the initial stages of negotiations and none had reached a conclusion yet.
Lavaron Sangsnit, director-general of the Fiscal Policy Office, has said that, 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 separately and the larger scale will lower investment costs, particularly for IT systems.
The Finance Ministry is the largest shareholder in TMB, with a 25.9% stake, while ING has a 25% stake.
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.
The new entity, if the deal goes through, would be the sixth-biggest bank after Bank of Ayudhya with an asset size of about 2.1 trillion baht.
Mr Praphan said TBank plans to raise its retail banking business ratio to 80% of loans outstanding in the next few years, with a focus on auto loans, the bank's strength, he said.
TBank is the country's longtime leader among auto lenders.
"Auto loans would facilitate other consumer loan expansion, including mortgage, personal loan, and micro-small and medium enterprise," Mr Praphan said.
The retail loan portfolio currently represents 70.4% of TBank's total lending portfolio, and 55.9% of the bank's retail loans are auto loans.
