TMB-TBank marriage creeps a step closer
Due diligence for the merger of TMB Bank and Thanachart Bank (TBank) is almost complete, marking a step towards the formation of a single bank expected to provide financial services by December.
After due diligence is done, the deal will seek the Bank of Thailand's approval before being placed on the agenda at shareholders' meetings for both banks, said a source familiar with the issue.
Dates for the shareholders' meetings will be set soon and the entire process will be finalised by year-end, the source said.
In February, TMB entered into a non-binding memorandum of understanding to consolidate with TBank through an entire business transfer with an estimated transaction value of 130-140 billion baht.
TMB plans to finance the transaction via a combination of debt and equity financing. Equity financing is expected to account for 70% of the transaction value.
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 new entity will be the sixth-biggest bank after Bank of Ayudhya (BAY), with an asset size of 2.1 trillion baht.
TBank is the country's largest automobile hire-purchase lender, while TMB has a strong focus in transactional banking.
After the merger, the resulting bank should have a combined market share of 10-11% for total assets and total deposits, approaching the size of Thailand's fifth-largest bank, BAY, based on information from Fitch Ratings.
According to the major shareholder structure of both banks, the Finance Ministry holds a 25.9% stake in TMB and Dutch bank ING has a 25% stake.
SET-listed Thanachart Capital holds a 51% stake in TBank, while Canada's Scotiabank owns the remainder.
The source said the number of branches and employees, particularly those in overlapping areas, will be considered after the merger is completed.
The consolidated bank plans to initially refrain from recruiting new staff and instead reshuffle redundant employees to replace retired staff, the source said, noting that both banks' retirement rate averages 30% a year.
Even though the Finance Ministry is expected to be the second- or third-largest shareholder of the merged bank, the ministry, under a mutual agreement with ING, will have a mandate to set the new bank's business direction to build up confidence, the source said.
The Finance Ministry will inject fresh funds worth 10-13 billion baht to subscribe to the newly issued shares to maintain a shareholding ratio in the consolidated bank, and dividend contributions from the Vayupak Fund will provide the ministry's funding, the source said.
TMB shares closed on Wednesday on the Stock Exchange of Thailand at 1.96 baht, down one satang, in trade worth 169.2 million baht.