TMB-TBank merger about to be cemented

Major shareholders of TMB Bank and Thanachart Bank (TBank) are expected to sign a memorandum of understanding (MoU) soon, inching towards a merger.

In principle, the merged entity will use TMB’s name, while TBank will no longer exist, said Prasong Poontaneat, permanent secretary for finance.

“The MoU will be signed soon. All major details have been concluded, and only small details remain to be settled. Foreign shareholders of both banks — Dutch bank ING and Canada’s Scotiabank — must discuss the issue because the merger is not just talks between the Finance Ministry and TBank,” he said.

The Finance Ministry is the largest shareholder in TMB, with a 25.9% stake, while ING has a 25% stake. Thanachart Capital holds a 51% stake in TBank, and Canada’s Scotiabank owns the remainder.

TMB is the country’s seventh largest bank, with assets of 892 billion baht, while TBank is sixth, with assets worth 1 trillion baht at the end of last year.

The Finance Ministry will not offer a merger tax shield on top of the benefits provided by a royal decree on tax incentives for banking mergers and acquisitions, he said.

Executives of both TMB and TBank must work out how to consolidate their branches and improving service units, Mr Prasong said. The process typically takes 3-6 months.

After the merger, the ministry will maintain its shareholding in the new bank and stands ready to inject fresh fund to subscribe to new shares if necessary, he said.

There are no specifics on how much the Finance Ministry must spend, but Mr Prasong said the recapitalisation will be a boon to the ministry as the investment cost will be kept at a low level.