He said his ministry needed a few more days before signing its approval of the deal.

In a surprise move yesterday, BAY postponed indefinitely its most important press conference in years, related to GE Capital Asia Pacific Ltd's acquisition of a 25-per-cent stake in the bank, explaining that the Finance Ministry was still considering the deal.

BAY first senior executive vice president Charlotte Donavanik said the bank had expected to receive ministry approval before yesterday's press conference.

"As the Finance Ministry is still considering the matter, Bank of Ayudhya would like to postpone the press conference," Charlotte said in a press release circulated yesterday. "It will be rescheduled, and you will be informed later."

BAY's stock rose yesterday 1.18 per cent to close at Bt17.20.

The market earlier expected the finance minister would approve the deal on Tuesday of this week, but Thanong said yesterday there was a "technical problem" that could be resolved in the next few days.

"I assure you the deal will not fail," Thanong said, adding that he had assigned one of his advisers, Chaiyawat Wibulswasdi, to look into the matter thoroughly.

Thanong said GE wanted to acquire a little more than the 25-per-cent ceiling for foreign shareholding in a local bank, and he was not sure whether he was authorised to approve the deal or whether it needed Cabinet approval.

"If we need Cabinet approval, we'll have to forward it to the next Tuesday's Cabinet meeting," he said.

Thanong explained that he received a proposal last Friday from the Bank of Thailand (BOT) related to the deal, and his advisers had not yet studied it thoroughly. However, the ministry and the central bank need to communicate and share a common understanding of the legal aspects of the deal.

As the ministry has not yet consulted the central bank, Chaiyawat will speak with BOT officials.

"I encourage [BAY's] move. As a former banker, I understand the situation well," said Thanong.

BOT governor MR Pridiyathorn Devakula said yesterday the central bank had no objection to the GE-BAY deal, but it needed the ministry's final word on it. The central bank had earlier proposed the deal to the ministry after endorsing BAY's proposed acquisition plan.

Central bank deputy governor Tarisa Watanagase said the new investment - or recapitalisation - would generally strengthen BAY and "prop up" losses or non-performing loans. It would also "freshen up" the bank's balance sheet for business expansion.

BAY has asked the central bank to allow GE Capital Asia Pacific to hold a stake in excess of the 25-per-cent ceiling on foreign investment in a Thai bank.

Pridiyathorn said the ministry must inform the central bank of its conclusion, and the BOT would then inform GE of the decision.

Meanwhile, it was widely anticipated earlier there would be capital inflows into the Kingdom to buy the Thai bank's stake. However, Pridiyathorn said the capital inflows that had been supporting the baht's recent strengthening have been going to the stock and bond markets.

"This is not money from the GE deal, because the Finance Ministry hasn't approved it yet," he said.

Analysts estimate that GE will spend almost US$581 million (Bt21.74 billion) for the acquisition, based on the announced selling price of Bt16 each for BAY's capital-increase shares.

Pridiyathorn said the central bank stepped into the foreign-exchange market to manage the baht again yesterday.

"If we hadn't gone in, the baht wouldn't be stable like this," he said.

The BOT governor said on Tuesday the baht was too strong and that the central bank intervened in the market on that day to help curb the currency's rise.

At 2.45pm yesterday, $1 was worth Bt37.385. The baht had gained marginally on an earlier rate of 37.43 to the dollar.

Wichit Chaitrong

Anoma Srisukkasem

The Nation