BANKING / CAPITAL INCREASE

TMB to wipe out B60bn losses, wrap up plans in March

DARANA CHUDASRI & NUNTAWUN POLKUAMDEE

TMB Bank expects to finalise its capital increase plans by March, according to bank president Subhak Siwaraksa.

Dr Subhak said the bank would clear its outstanding accumulated losses of nearly 60 billion baht either through a reduction in par value or through operating profits, with the final choice depending on the bank's shareholders.

He declined to speculate on reports that the Finance Ministry and Singapore's DBS Bank _ TMB's two largest shareholders _ were planning to shake up the bank's senior management and board.

Chulakorn Singhakowin, a former president of the Bank of Asia, is reportedly a candidate to be named to the board, as is David Hendrix, a former senior executive with Kasikornbank.

''Whether management is changed is up to the shareholders. I am a professional and can only do my best for the bank,'' Dr Subhak said.

''TMB Bank faces three weaknesses that any management team must try to overcome _ narrow interest spreads, low returns from loan portfolio and low fee-based income.''

The Finance Ministry earlier this month played down reports that TMB needed to raise 35 billion baht this year. The bank reported a net loss of 12.28 billion baht last year, and faces higher provisioning needs to meet tougher standards under the new IAS 39 accounting standard adopted by the central bank.

Dr Subhak said the bank's target this year was to raise savings deposits to 20% of its total base from 15% now to help reduce funding costs.

The bank's non-performing assets and non-performing loans, which totalled 56 billion baht or 13% of total assets at the end of 2006, are expected to decline to 5% by the end of the year. The bank sold off nine billion baht in non-performing loans earlier this month and hopes to sell a total of 20 billion in distressed assets and loans this year.

''The target will be evaluated each quarter, and we expect that these initiatives will help boost our operating profits,'' Dr Subhak said.

The bank yesterday joined hands with subsidiary TMB Asset Management to launch a new TMB Extra Cash card allowing unitholders to make ATM withdrawals against their fund holdings.

The card, open to TMB Bank depositors and unitholders of TMBAM's TMB Money Fund, offered extra convenience to investors, according to Jotika Savanananda, the TMBAM managing director.

Withdrawals are made with no fee, but are limited to 10,000 baht per day for investors with account balances of up to one million baht, and 20,000 baht for balances of one to 10 million.

TMBAM expects 5,000 customers to sign up for the new card.

Mrs Jotika said TMBAM projected net asset growth of 15% this year from 120 billion baht at the end of 2006.

Investment strategy would continue to focus on short-term bonds, foreign investment funds and the company's index funds, she said.

TMBAM plans to launch six new short-term bond funds over the next several months, featuring investment terms of three, six and 12 months and focusing on treasury bills and money-market instruments.

The company also plans to launch four new FIFs, each targeted on investments in Europe, the US, Japan and China.

The first, focused on Chinese stocks listed on the Hong Kong Stock Exchange, is set to open in mid-February.

TMBAM currently offers only one FIF, the TMB Gold Fund, with net assets of 1.2 billion baht.

''Investing overseas helps diversify one's investment risk and offers the opportunity to reap higher returns when compared with the local market,'' Mrs Jotika said.

TMBAM also is planning to launch a new equity index fund to take advantage of current low valuations in the local market.

Mrs Jotika said TMBAM's assets under management grew 60% in 2006, with net inflows of 36 billion baht, well beyond the company's target of 12 billion.

''This year, we are targeting NAV growth of 15 billion baht, or 15%, and in line with the industry. But hopefully we will see large inflows that match last year,'' she said.

Bangkok Post
Friday February 02, 2007