The Finance Ministry will buy TMB Bank's new shares via a rights issue expected in September, according to a ministry official.

"We [the ministry] need to decide on a buying route by August. We have two or three options. But the most likely one is for the Vayupak Fund I to buy the new shares. We will make a final decision on Monday," the official said.

Earlier, caretaker Finance Minister Thanong Bidaya said he did not want the public to think that he used the Finance Ministry as a vehicle to help TMB because he is a former bank executive. This may imply that he may not allow the Finance Ministry to directly put more money into the bank.

The Finance Ministry is the majority shareholder in TMB with a 31-per-cent stake.

Caretaker Deputy Finance Minister Chaiyot Sasomsub said yesterday that the ministry would complete all details about the capital increase next week, after a meeting with ministry officials.

"We believe the Bt3.2-billion capital increase share issue can be completed by September," Subhak Siwaraksa TMB's chief executive officer, said yesterday.

This is earlier than the bank's initial schedule for completion by October.

Subhak was confident that all the bank's major shareholders would exercise their right to subscribe for the new share offer.

His comment was in reaction to several local newspaper reports that TMB's major shareholders may decide not exercise their rights, in particular the Finance Ministry and the Royal Thai Army.

"The bank's major and minor shareholders have given positive responses on this. Foreign shareholders also expressed interest at the bank's road show in Singapore last week," Subhak said.

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

TMB plans to issue 3.2 billion shares to existing shareholders at one new share for every 4.75 held. This would increase the bank's total shares to 18.7 billion, from 15.5 billion. The bank plans to use the new funding for loan expansion.

Recently, the bank also launched a US$200-million (Bt7.6 billion) hybrid-bond offer. This raised the its capital adequacy ratio from 9.6 per cent to 10.2 per cent.

In addition, Subhak said TMB's lending growth for the first half of the year was lower than that targeted, mainly due to the country's economic climate. As a result, the bank has lowered its loan growth target for the full year to 6 per cent from between 6 per cent to 8 per cent.

This was partly reflected in the bank's net profit for the second quarter, which was down year on year.

However, Subhak said he believed TMB's third-quarter results would improve, as the net interest margin is expected to rise from the current 2.1 per cent. This would be generated by new loan growth and higher lending rates after the recent interest-rate hikes.

Wichit Chaitrong,

Somruedi Banchongduang

The Nation