The central bank's supervision group senior director Sorasit Soontornes said TMB's NPLs had increased due to stricter classification. The bank had recently improved its classification of loans after being requested to do so by the central bank.

NPLs jumped because of a gloomy economy, oil-price hikes, rising inflation and baht appreciation, he said.

"We did not find any deception cases in TMB in the latest examination. It is extremely different from the Krung Thai Bank fraud cases," he added.

The central bank statement was made in reaction to remarks on Thursday from Deputy Finance Minister Sommai Phasee. He demanded scrutiny of TMB to discover why it remained in the red in spite of a series of recapitalisations.

He said TMB was treated differently from Krung Thai Bank, which was examined as a state enterprise.

Sorasit, however, said TMB's latest capital increase would cover business over the next two to three years. Focusing year by year would result in too-frequent capital increases.

The Finance Ministry has injected Bt33 billion into the bank since 2000 and will add Bt8.75 billion at the next recapitalisation, expected in July.

Sorasit said the biggest problem at TMB was its merger with DBS Thai Danu Bank and the Industrial Finance Corporation of Thailand. The economy and other factors have not helped.

Bank of Thailand Governor Tarisa Watanagase said it would finish its annual examination of TMB next month.

A poor result would see the central bank seek remedial action, including recapitalisation, Tarisa said. However, she said, TMB's Bank for International Settlements ratio was above requirements.

Anoma Srisukkasem

The Nation