"A difference in business models and management styles was the reason behind the collapse of the negotiations," a brokerage-industry source said.

KTB owns 19.44 per cent in Trinity Wattana, a holding firm that is the majority shareholder in Trinity Securities, Trinity Advisory and Trinity Polaris Futures. The bank has two representatives on Trinity Wattana's board of directors.

The source said that Trinity Wattana's business model did not match well with Krung Thai Bank's plan to become a convenience bank.

Besides, Trinity Wattana is progressive while brokers under banks' controls are quite conservative because their actions are dictated by the policies of their parent firms.

Under the universal banking concept, all commercial banks - with the exception of Standard Chartered Bank (Thai) and Land and Houses Bank - have spread into the brokerage business through their subsidiaries. For example, SCB Securities is wholly owned by Siam Commercial Bank (SCB).

"If KTB controls Trinity Wattana, the latter would not be very happy," the source said. "If KTB continues holding its stake in Trinity Wattana, it would not result in any adverse effects to the company because the bank would remain in a business alliance."

 The bank yesterday reported to the Stock Exchange of Thailand (SET) that it would spend Bt432 million to buy 43.2 million shares in TSEC Securities, a small brokerage with five trading rooms.

The deal is expected to be completed this month. The brokerage's registered capital will double to Bt864 million from Bt432 million following the transaction.

The bank said that the purchase of a controlling stake in TSEC Securities was to achieve its goal of providing full-scale financial services and to reinforce the potential of the bank's operations.

TSEC Securities' lost Bt33.87 million in the first half of this year, compared to a Bt73.3-million net loss in the same period last year.

Meanwhile, KTB president Apisak Tantivorawong said that the TSEC investment would start to factor in the banks' financial statements in the fourth quarter this year.

The investment will reach a break-even point next year, he reckoned.

The bank will install its representatives in the brokerage's management and it will use the banks' existing customers to expand the brokerage's business.

"Holding 50 per cent in TSEC seems to be suitable for operations, because it would turn into a state enterprise if the bank owned the entire stake," he said.

Siriporn Chanjindamanee

The Nation