Proposed merger of TMB and Thanachart goes to Finance

Corporate December 19, 2018 01:00

By   THE NATION

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THE MERGER between TMB Bank (TMB) and Thanachart Bank (TBANK) will be proposed to Ministry of Finance today, with a capital increase plan for TMB to allow ING Bank NV of the Netherlands to hold the largest stake – at 25 per cent – in the Thai bank.



The deal is expected to be completed before the end of next year.

Finance Minister Apisak Tantivorawong will meet today with officials from Thanachart Bank and ING Bank to discuss the finalised merge plan between TMB and TBANK. 

Joining the meeting are officials from Canada-based Bank of Nova Scotia, Ministry of Finance’s Fiscal Policy Office (FPO) and State Enterprise Policy Office (Sepo).

An anonymous source close |to the deal said that the four |parties have had protracted discussions on the planned merger and acquisition between TMB and Thanachart Capital Plc’s banking arm TBANK. Based on the plan, ING Bank will hold the largest stake in TMB at over 20 per cent but no more than 25 per cent after its new capital increase. TBANK will hold a 20 per cent stake and Ministry of Finance will hold below a 20 per cent share. Bank of Nova Scotia will hold the smallest stake among the four.

“There have been discussions for a while until yesterday the deal was preliminarily finalised. There is a draft memorandum of understanding (MoU) for all to sign, making commitments to the planned merger of TMB and Thanachart Bank. And the progress will be reported to the (finance) minister,” the source said.

The source said that executives of ING Bank and Bank of Nova Scotia have flown in to meet the Thai finance minister today, while Thanachart Capital will be led by its chairman, Banterng Tantivit, and chief executive officer, Suphadej Poonpipat.

The move came after the Cabinet decided to waive tax for a merger of financial institutions on April 17, 2018. Then, Bank of Nova Scotia asked for serious discussions and all have discussed the deal, which has been finalised and will be proposed to the Thai finance minister today, the source said.

After reporting the deal to the finance minister, the next step for |all four parties is to expedite a |completed merger process by the end of next year (2019) as the tax holiday on financial institution mergers will expire at the end of next year.

TMB’s registered capital is Bt41.90 billion or 43.85 billion shares at a par value of Bt0.95 apiece. 

As of April 24, 2018, Ministry of Finance was the bank’s largest shareholder with a 25.92 per cent stake, followed by ING Bank’s 25.02 per cent stake, Thai NVDR’s 11.50 per cent stake and with retail investors holding the remainder.

As of September 30, 2018, TMB had total assets of Bt873.17 billion, loans of Bt635.91 billion, deposits of Bt638.86 billion with a capital adequacy ratio of 17.76 per cent, and non-performing loans of 2.69 per cent of total outstanding loans.

TBank’s registered capital is Bt99.14 billion or 9.91 billion shares at Bt10 apiece. 

Thanachart Capital holds a 50.96 per cent stake in the bank and Scotia Netherlands Holdings owns a 48.99 per cent stake.

As of September 30, 2018, Tbank had total assets of Bt1.00 trillion, loans of Bt735.96 billion, deposits of Bt700.39 billion with a capital adequacy ratio of 15.30 per cent and NPL of 2.06 per cent.

After the planned merger if included in the third quarter of this year only, the planned newly merged bank is expected to see total assets of Bt1.87 trillion, deposits of Bt1.37 trillion and loans of Bt1.33 trillion. 

In terms of assets, the planned newly merged bank is estimated to sit in sixth place among the country’s commercial banks.

The source said that both TMB and Tbank’s similar businesses, such as asset management, must be managed and that would affect the shareholding proportion.

Tbank’s businesses include Thanachart Securities, Thanachart Asset Management, Thanachart Insurance, TS Asset Management. The bank’s also owns 65.18 per cent of leasing arm Ratchathani Leasing. TMB has its wholly owned subsidiary Phayathai Asset Management and its 35-per-cent-owned fund management arm TMB Asset Management.

The source said that as the major shareholder, ING Bank would manage the planned new bank and will be given the positions of chairman and chief executive officer. Other shareholders will be given the |positions of directors and vice chairman following their stake proportions.

Neither bank was planning to lay off their employees, even where there is overlap in business sectors and branches. 

Employees will be treated under the terms of the Bank of Thailand’s requirements, the source said.

“Banterng is worried if there’s news about the planned merger, the employees could be in a panic. This matter is governed by the central bank,” the source said.