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Published on November 8, 2007

DBS Group Holdings has joined with Deutsche Bank to bid for a 25.2-per-cent stake in TMB Bank in the second offer to the loss-making bank after the one by Dutch group ING Bank, TMB chairman Somchainuk Engkrakul said yesterday.

Somchainuk said late yesterday that TMB's board of directors had already chosen one strategic partner, but declined to name the partner, saying investors should wait to see what the bank announces to the Stock Exchange of Thailand today. However, he hinted that the bank received a higher price than under the previous plan.

"The pricing of the two offers was different but I can't elaborate at this point," Somchainuk said.

Somchainuk said the bank's recapitalisation plan would be concluded within this year as scheduled and there was no discussion of any management change during the board meeting.

According to the Thai-language service of Reuters news agency, DBS Group and Deutsche Bank have offered Bt1.6 per share for the TMB share purchase, higher than the Bt1.4 offer made earlier by ING Bank.

DBS, which already owns 16 per cent of Thailand's

fifth-largest commercial

bank by assets, has offered to buy up to 25.2 per cent, equal to the proportion that ING Bank said it would buy in its plan.

Similar to ING Bank, DBS Group plans to increase its stake to 35 per cent in the next two years, a TMB Bank official who declined to be named was quoted by Dow Jones Newswires as saying.

According to the recapitalisation plan, TMB will issue new shares to raise at least Bt35 billion of funds.

The Finance Ministry will have to put Bt7.5 billion of capital into the bank to keep its shareholding at 26.11 per cent, while the new strategic partner, whether ING Group or DBS Group and Deutsche Bank, is expected to put in around Bt18 billion or more and will hold 25.2 per cent in the bank.

If the Development Bank of Singapore fails to get the new shares, its shareholding would be diluted from 19 per cent down to 6 per cent.

Over the next two years, if the new partner lifts its shareholding to 35 per cent, the ministry may allow its share to dilute to 22 per cent.

Recently it was reported that the Finance Ministry would sell its holdings in

Thai Airways International, Bangkok Bank, Siam Commercial Bank, MCOT and Phadeang Industrial to raise Bt7.5 billion for the recapitalisation of TMB Bank. These shares would be sold to the Government Savings Bank.

TMB shareholders vote on the plan on November 27.

Finance Minister Chalongphob Sussangkarn earlier yesterday said a Bt35-billion recapitalisation of TMB Bank would enable the bank to run its business for the next three or four years.

His comment was made after critics said the bank's recapitalisation might not be adequate for further loan-loss provisions.

However, Chalongphob warned that after the Bt35-billion capital increase, the next recapitalisation should be done to expand loans and not to solve its financial troubles as happened this time.

Last month, TMB issued 25 billion new shares at a price of Bt1.40 each to raise registered capital from Bt186 billion to Bt437 billion.

Somruedi  Banchongduang,

 Dow Jones Newswires,

 The Nation