TMB Bank president Subhak Sivaraksa is keeping his mouth shut despite mounting rumours that he is on his way out.

"This point has been quoted many times, so I don't want to comment on it," he told The Nation yesterday.

A Finance Ministry source was cited by the Thai-language Reuters newswire as saying that the banks' major shareholders were discussing a change in the bank's president and a decision would be made before the bank launches its capital-increase mission.

The Finance Ministry owns 31 per cent of the bank, followed by DBS Bank of Singapore with 16 per cent.

TMB Bank is expected to mobilise Bt35 billion in fresh funds by issuing new shares to existing shareholders. The proceeds would be used to strengthen the bank's capital adequacy ratio, which stood at 10.58 per cent of risk-weighted assets as of March.

The Finance Ministry's stake is expected to be diluted to 25 per cent, as it does not plan to exercise all its rights to subscribe to the capital-increase shares.

The speculation focused at the top of the bank comes amid a flurry of unflattering news.

Moody's Investors Service recently downgraded TMB Bank's hybrid rating from Baa2 to B1 on concerns that the bank will not pay interest on its hybrid securities.

Standard & Poor's on Thursday cut its ratings outlook for TMB Bank to negative due to uncertainties over the bank's recapitalisation plan. The international credit agency said the outlook downgrade implied there was at least a one-in-three possibility of the bank's ratings being lowered in the intermediate term.

Subhak, who has worked at TMB Bank for decades, rose to its head after a tripartite merger of Thai Military Bank, the Industrial Finance Corporation of Thailand and DBS Thai Danu Bank formed the country's fifth largest bank by assets.

TMB Bank last year raised Bt9.7 billion by issuing new shares to existing shareholders and US$200 million (about Bt7.9 billion at that time) by floating the hybrid securities.

Another Finance Ministry source said the ministry had yet to make decision about jettisoning Subhak.

"We are now talking about the bank's business plan," the source said.

Finance Minister Chalongphob Sussangkarn has repeatedly confirmed that TMB Bank's fund-raising would be completed early next month.

The bank should bundle its plan to revamp its management structure with its recapitalisation plan, he said.

"The ministry on behalf of the bank's major shareholder considers that the recapitalisation should lead to the bank's sustainability and the bank should clearly improve its management system to show that the bank can make profit in the future. The plan should be transparent enough not to make all parties hesitate," he said.

The bank posted disappointing first-quarter earnings of Bt220.18 million, compared with Bt2.13 billion in the corresponding quarter last year. The poor showing could be ascribed to a Bt1.21-billion provision taken to comply with International Accounting Standard 39 and a slight narrowing of its net interest margin from 2.27 per cent last year to 2.26 per cent.

Somruedi  Banchongduang,

Wichit Chaitrong

The Nation