TMB interest unlikely

Business News - Friday December 14, 2007

IN Brief

TMB interest unlikely

BANKING :TMB Bank is unlikely to pay interest to holders of its hybrid debt instruments due to ongoing losses, according to Tarisa Watanagase, the governor of the Bank of Thailand.

The central bank prohibited TMB from making payments on its $200 million in outstanding hybrid securities in July as a result of ongoing losses in the first half.

Dr Tarisa said that despite TMB's improved prospects with its recent capital increase, it was unlikely to be in a position to pay interest to bondholders for the second half.

TMB reported third-quarter losses of 2.5 billion baht compared with profits of 1.28 billion the year before. First-half losses totalled 18.14 billion baht compared with a profit of 3.3 billion last year.

The bank, in which ING Bank recently acquired a 30% stake, has indicated that fourth-quarter results would continue to show a loss due to the need to set aside another 25 billion baht in provisions for loan losses.

TMB's hybrid debt is currently rated below investment grade at CC by Standard and Poor's and B1 by Moody's.

TMB shares closed yesterday on the Stock Exchange of Thailand at 1.42 baht, up one satang, in trade worth 41.2 million baht.

-

BBL delays expected

BANKING :The Bank of Thailand is being understanding about Bangkok Bank's difficulties in selling its 19% shareholding in ACL Bank, according to central bank governor Tarisa Watanagase.

Bangkok Bank has already completed talks to sell its stake in Thailand's smallest bank to China's ICBC. But the deal has been held up due to foreign shareholding restrictions under current law.

While the new Financial Institutions Act, which expands foreign shareholding limits to 49% from 25%, has already passed the National Legislative Assembly, the law will not formally take effect for another 180 days.

Mrs Tarisa said the central bank understood the difficulties, and was awaiting a formal proposal from Bangkok Bank about the current status of the sale.

Bangkok Bank is obliged to divest its shareholdings in ACL due to cross-shareholding restrictions under the central bank's financial master plan and the single-presence rule. Bangkok Bank is already paying daily fines to the central bank for its failure to comply.

Bangkok Post