BANKING / FUND-RAISING

TMB needs time to persuade shareholders

TMB Bank, the country's fifth-largest lender, will take longer than expected to complete a 35-billion-baht share sale because it needs more time to convince its biggest shareholders to invest. The bank would not be able to complete the sales to existing investors by June as targeted, chairman Somchainuk Engtrakul said yesterday.

Executives were drafting a business plan for the Finance Ministry and Singapore's DBS Group Holdings Ltd, TMB Bank's two biggest shareholders, to consider before they invest, he said.

TMB Bank, in which the Royal Thai Army is also a major shareholder, is seeking new funds after mounting bad loans led to its biggest loss in three years in 2006. Like other banks, it has set aside higher provisions to meet the central bank's stricter reserve requirement for bad loans.

The Finance Ministry has pledged to buy into the sale, though at a smaller proportion than its current stake, said Mr Somchainuk, a former permanent secretary at the ministry.

The Finance Ministry has a 23% stake in the bank and DBS owns 18%.

TMB Bank was being forced to sell new shares because last year's loss made it difficult to raise money from loans or bond sales, Deputy Finance Minister Sommai Phasee said in January.

''We are waiting to review TMB Bank's business plan before we can comment on the capital-raising exercise,'' DBS spokesman Ronald Chong said by telephone from Singapore.

TMB said yesterday that its first-quarter net profit dropped 93% year-on-year to 159 million baht because of an increase in bad loans. The bank lost 12.3 billion baht in 2006, compared with a profit of 7.8 billion baht a year earlier.

Shares of TMB closed yesterday on the Stock Exchange of Thailand at 1.78 baht, up one satang, in trade worth 121.95 million baht. BLOOMBERG NEWS.

Bangkok Post

Last Updated : Saturday April 21, 2007