Two Financial Companies Eye Stake In Thailand's Tmb Bank

[LaoPo]

Two financial companies eye stake in Thailand's TMB Bank

By Supunnabul Suwannakij

Last Update: 5:19 AM ET Jul 19, 2007

(Update with comment from Finance Minister)

BANGKOK (MarketWatch) -- TMB Bank PCL (TMB.TH )

Thailand's fifth-largest bank by assets, is being wooed by two financial companies who want to take a stake in the bank via its upcoming fund raising, one the bank's board members said Thursday.

"Two financial companies have expressed interests to become our strategic partner and would like to conduct due diligence," Somchai Sujjapongse told Dow Jones Newswires, but declined to identify the companies.

The Thai language Kaohoon newspaper, quoting unnamed sources that included an official at the Ministry of Finance, reported Thursday that ING Group and Morgan Stanley have submitted requests to acquire a stake in TMB through its fund raising. The finance ministry owns 31.1% of the bank.

"I can't reveal the name of those companies. What appeared in the paper isn't 100% accurate," Somchai said.

The negotiations will take place at the same time as talks with DBS Group Holdings Ltd. (D05.SG) about what proportion of the fund raising the Singapore-based lender will subscribe to, said Somchai.

DBS Group, which has a 16% stake in TMB, will remain as the largest foreign shareholder after the fund raising, TMB President and Chief Executive Subhak Siwaraksa has said previously.

TMB is working on a THB35 billion ($1 billion) fund raising plan that is likely to include a sale of new shares and a bond issue. The bank needs fresh funds to boost its capital adequacy ratio, which is below the average of its peers.

Even with the prospect of potential investors carrying out due diligence, the fund raising is expected to be finalized within the existing timeframe of July or August, said Somchai.

However, Finance Minister Chalongphob Sussangkarn said Thursday that everything will be clear by September and the recapitalization deal will be settled by the end of the year.

After the fund raising, the Ministry of Finance's stake in the bank will fall from the current 31.1% but remain above 25%, Chalongphob said.

TMB Bank said in January that it made a net loss of THB12.28 billion in 2006. The bank's weak performance prompted Bank of Thailand to ask TMB to skip interest payments due July 2 on its $200 million hybrid Tier 1 bond.

If the bank successfully raises THB35 billion, its capital adequacy ratio will rise to 15%-17%, roughly the same level as its larger rivals, from slightly over 10% currently, analysts say.

LaoPo