He said the big shareholders would buy the new shares because the issue is not "too large" and the price will be attractive. The company has yet to set a price for the new shares, which it will issue within six months.

Subhak made his pronouncement to dispel a report in a local newspaper that the bank's large shareholders, particularly the Royal Thai Army, would probably pass on buying the new shares.

The bank announced on Friday that it planned to issue 3.2

billion shares to existing shareholders at rate of one new share for every 4.75 held. This would increase the bank's outstanding shares to 18.7 billion shares, from 15.5 billion.

TMB has four major shareholders: the Finance Ministry, DBS Bank (Singapore), the Army, and Thai Life Insurance Group, which own 31 per cent, 16 per cent, 5 per cent and about 1-2 per cent, respectively.

That said, DBS Bank (Singapore) will likely only buy enough shares so that it does not breach the foreign ownership ceiling set by the Bank of Thailand (BOT), Subhak said.

The central bank generally allows foreign outfits to own no more than 25 per cent of local commercial banks. Some foreign investors have, however, in the past managed to convince the central bank to bend the 25-per-cent rule.

 The newspaper reported that if the Army failed to purchase the new shares, DBS Bank would probably buy more stock than allowed by the BOT rule.

"But DBS Bank doesn't want to hold more than the BOT limit of 25 per cent," he said.

Asked whether the Singaporean-based bank was likely to buy additional shares via nominees, he said there was no reason for DBS bank to do such a thing.

However, the bank's statement to the Stock Exchange of Thailand (SET) said that if there were shares remaining from the offering, the bank's board would allocate any unsold stock to domestic and foreign institutional investors or specific investors through a private placement.

Moreover, the SET said that the bank's board was authorised to ask the BOT, the Securities and Exchange Commission and the SET that foreign shareholding rules or regulations be relaxed in this instance.

Despite the shroud of political uncertainty veiling the country, TMB has kept unchanged its schedule for raising fresh capital. The bank's share subscription period is slated for May 15-19 and it will hold a shareholder meeting on April 27.

But Thanong Bidiya, caretaker finance minister, recently said that TMB's capital increase would have to wait until a new Cabinet is installed.

Somruedi Banchongduang

The Nation