The Cabinet yesterday approved a Finance Ministry plan to sell 11 per cent of MCOT Plc to the Government Savings Bank (GSB) so it can spend Bt3 billion to buy capital-increase shares in TMB Bank.

Caretaker Deputy Finance Minister Chaiyot Sasomsub said the ministry would sell the stake in MCOT, operator of state-owned Modernine TV, to the GSB, reducing its shareholding in the television operator from 77.28 per cent to 66.28 per cent, thus generating Bt3.02 billion in cash for the ministry.

The Finance Ministry will then use the funds to buy 1 billion TMB Bank capital-increase shares at Bt3 per share.

Chaiyot said there was one condition on the deal, that the GSB sell the MCOT shares back to the ministry within three years at market price plus its 12-month deposit rate, plus 1.66 per cent as a management fee.

The MCOT share sale will reduce the Finance Ministry's shareholding in MCOT to less than 70 per cent, set as the minimum level by an earlier Cabinet resolution, so the ministry asked the Cabinet to revise the resolution.

It argued that since the stake was moving to the state-owned savings bank, the television operator's financial status would not be affected, and MCOT's majority shareholding would remain in the government sector.

Chaiyot said that in buying TMB Bank's capital-increase shares, the ministry was exercising its right to subscribe to one new share for every 4.75 existing ones it held.

The ministry currently holds a 31-per-cent interest in TMB Bank.

The ministry believes TMB Bank will show improved net profits and be able to pay dividends to shareholders within three years.

Last year, the bank recorded a net profit of Bt8 billion, although it also had retained losses. In this year's first quarter, the bank reported a Bt2-billion net profit.