Thailand is set to approve ING's bid for a 25.2 percent stake in TMB Bank after the Dutch banking group won out against a rival bid from Singapore's DBS Group, the finance minister said Thursday.
The mid-sized TMB Bank said Thursday it had decided in favour of ING Group's increased offer of 1.60 baht a share, matching the offer made by DBS, which already holds a 16 percent stake in TMB. ING will put in 21 billion baht (618 million dollars) and after recapitalisation of TMB will hold a 25.2 percent stake in the bank with another 4.9 percent in common shares or non-voting depository receipts.
The finance ministry is expected to keep its holding at 26.11 percent by subscribing to the issue of new shares. Finance Minister Chalongphob Sussangkarn said he was set to approve the deal and waive the five percent limit on foreign holdings in Thai banks.
"TMB Bank has already informed the stock exchange and it will later send official letters to the finance ministry and Bank of Thailand for approval as a foreign bank is not allowed to hold more than a five percent of stake in a Thai bank," Chalongphob told reporters.
"I don't see any problem in this case," he said. "In the past DBS has not shown interest in additional investment in TMB Bank, WHB to consider and make capital increase possible." Under the agreement with TMB, ING can increase its holding to 35 percent in the next two years.
"The meeting of the board of directors has opined that the proposal of ING Bank N.V. provides higher benefits to the bank and its shareholders," TMB president Subhak Siwaraksa said in statement to the Stock Exchange of Thailand. "Thus, the meeting approves the proposal of and chooses ING Bank N.V. as a new strategic partner."
Under the recapitalisation plan, TMB said it would increase its capital by issuing 25 billion new shares. Approximately 13.1 billion of them will be allocated to ING at a price of 1.60 baht per share. The remaining shares would be allocated to the finance ministry and other existing shareholders at 1.40 baht per share.
The total recapitalisation amount will be 37.6 billion baht. TMB shares traded at 1.58 baht on Tuesday. Founded in 1957 as the Thai Military Bank to pool military funds, the bank in 2004 merged its operations with DBS Thai Danu Bank and the Industrial Finance Corporation of Thailand. In 2005 it rebranded itself as TMB Bank PCL.