TMB Bank and Thanachart Bank (TBank) are expected to sign a memorandum of understanding (MoU) next month, taking them another step towards a merger, said the Finance Ministry, the largest shareholder in TMB.
A merger has already been agreed in principle by both sides.
After the MoU is signed, it is expected to take another three to four months to map out the details of the merger, said Prasong Poontaneat, the permanent secretary for finance in his capacity as TMB board chairman.
"Talks about the merger plan won't be short given the vast details involved," he said.
As for the possibility of injecting new capital to maintain a shareholding in the merged bank, he said, the ministry sees good potential to gain attractive returns from an investment in the new entity.
The ministry holds a 25.9% stake in TMB while ING has a 25% stake. Thanachart Capital holds a 51% stake in TBank and Canada's Scotiabank owns the remainder.
After the merger, the new bank could become the fifth or sixth largest in the country, said Mr Prasong.
"We're seeing a good future in [the agreed] merger. Having struggled to deal with accumulated losses in the past, TMB now is now reaping profits," he said.
TMB chose TBank over state-owned Krungthai Bank for its merger plan because TBank is of the same size of TMB and has strength in the hire purchase business that TBM doesn't have, he said.