TMB's share price tumbled to Bt4.42 in intra-day trading, down from Bt4.62 on Thursday, before closing at Bt4.44.

The president of TMB, Subhak Siwaraksa, yesterday failed to confirm whether DBS Bank would raise its stake in TMB.

"I can't say right now. We have to wait and see," he said. He admitted that since the political trouble and anti-Singapore sentiment had broken out DBS had become concerned. "They have called for updates," he said.

Nevertheless, he confirmed that the bank's 15 board members, including two representatives of DBS Bank which currently holds a 16-per-cent stake in TMB, had unanimously approved TMB's plan to raise it's capital from Bt18 billion to Bt20 billion.

TMB plans to issue up to US$200 million in hybrid bonds, which could be counted as capital, and issue 3.222 billion shares to existing shareholders within the next six months. The board's approval means that if DBS subscribes to the shares in its current quota, its stake in TMB would remain unchanged.

"The fund-raising plan has been endorsed with support from the bank's major shareholders, which include the Finance Ministry, DBS Bank, Thai Life Insurance Group and the Thai armed forces," said Subhak. The increase in capital will allow the bank to increase its single-client lending limit from Bt8.5 billion to Bt13 billion and help reduce non-performing loans.

When DBS Thai Danu Bank merged with TMB, DBS made known its desire to raise its stake in TMB.

Citing confidential sources, Singapore daily Business Times said yesterday that DBS Bank's parent company, DBS Group Holdings, had deferred their planned stake increase due to the current tensions in Thailand. However, a bank spokesperson told the newspaper: "We remain committed to Thai Military [TMB]."

Somruedi Banchongduang

The Nation