Finance Minister Chalongphob Sussang-karn has instructed Deputy Minister Sommai Phasee to "step back" in his public statements about TMB Bank, its management and its financial performance.

The Finance Minister stepped in yesterday after Sommai repeated his insistence that TMB Bank's management team must step down prior to the bank's proposed Bt35-billion capital increase, because its shareholders have lost faith in their performance. Sommai indicated new funds would not be injected into the bank - whose major shareholders include the Finance Ministry and DBS Bank of Singapore - unless its management team, led by Subhak Siwaraksa, resigned.

Chalongphob, who declined to either accept or deny any of Sommai's statements, said he called on the deputy finance minister to step back to reduce obstacles to the recapitalisation.

The row comes amid increasing questions about TMB Bank's continuing poor performance despite a recapitalisation last year.

"The proper sequence for improving TMB's performance is, first, the management must be changed," Sommai told a press conference yesterday. "Second, shareholders inject new capital into the bank, and then the board of directors must be replaced."

Chalongphob said he was confident the bank's recapitalisation would be completed in August and the capital injected into the bank in September. However, everything must be done properly.

"The management change must be done in line with procedure. In July, there will be a board meeting. Then in August there will be a shareholders' meeting, when we will know who will put how much capital into the bank and how the management structure will be changed. We should wait," Chalongphob said. Sommai is apparently angry because TMB's labour union complained to Chalongphob recently that the conflict between Sommai and the bank's president and CEO, Subhak, has damaged the bank.

On Tuesday, the labour union asked the Finance Minister to stop Sommai from giving interviews about TMB's losses and possible fraud.

Sommai, a former chairman of TMB, earlier asked the Bank of Thailand to investigate the bank's huge financial losses despite last year's recapitalisation.

Asked yesterday whether the Finance Ministry, TMB's largest shareholder, would take action to axe the bank's management team, Sommai said the ministry did not want to take harsh measures. However, the management team should be aware that shareholders, especially the Finance Ministry and DBS Bank of Singapore, with a combined stake of 47 per cent, are not happy with their performance, he said.

Sommai conceded that the bank's current chairman, former finance permanent secretary Somchainuk Engtrakul, represented the ministry on the bank's board, along with other ministry-appointed directors, but said the ministry could do nothing.

"It's Thai-style management," he said, mocking the situation.

Asked whether the country's military leaders had intervened in the management of TMB Bank, Sommai said the top brass had given the ministry a free hand to oversee the bank.

Rumour was rife yesterday that the CEO of the country's fifth-largest bank had resigned, but Subhak insisted he remained in the position.

The bank's chief operating officer, Kraithip Krairiksh, said the bank's management team would have to wait for the bank's major shareholders to decide upon the planned recapitalisation. Once the two key shareholders - the Finance Ministry and DBS Bank of Singapore - make their decision, they will inform the bank's board of directors and its management team of any conditions coming together with the recapitalisation.

Wichit Chaitrong,

Somruedi     Banchongduang

The Nation