In a filing to the Stock Exchange of Thailand yesterday, the bank said it had spent Bt10 million to acquire 575,000 shares from JPMorgan, doubling its stake in AJF from 38.33 per cent to 76.67 per cent.

The rest of AJF is owned by the bank's associated companies - Ayudhya Securities Plc, Ayudhya Insurance Plc and Ayudhya Allianz CP Life Plc.

JPMorgan now has only one business remaining in Thailand, JPMorgan Securities (Thailand). In 2001, it divested its holding in JF Thanakom to Bangkok Bank.

JPMorgan entered the mutual fund business in 1997 by setting up the joint venture with Bank of Ayudhya.

AJF posted an unaudited second-quarter net loss of Bt273.3 million, compared to a Bt85.96-million profit in the same quarter a year ago, according to the filing.

The mutual fund firm now manages Bt29.87 billion in assets, representing 3.26 per cent of the country's combined assets under mutual fund management.

In late 2003, Bank of Ayudhya came to the rescue of AJF after it faced a run of Bt4 billion in redemptions from fixed-income funds. Then last year, AJF was one of several asset management firms that fell victim to delayed payment by embattled Picnic Corp on its bills of exchange.

AJF's then managing director Reungvit Nandhabhiwat resigned late last year and Chatrapee Tantixalerm, CEO of Ayudhya Securities, was brought in to replace him. Since then AJF has kept a low profile.

Bank of Ayudhya said its increased shareholding in AJF is consistent with its strategy of moving to a universal banking model where it can offer a complete range of financial services to its customers.

The bank said AJF would be the principal investment manager for the group, providing services to customers of the group.

The bank will continue to provide a distribution channel for AJF's products through the bank's national branch network.

The sale of AJF is also part of JP Morgan Asset Management's strategy of focusing on core businesses and markets consistent with its regional positioning.

Charlotte Dhonavanik, first senior executive vice president of Bank of Ayudhya, said her bank didn't have any plan to merge AJF with PrimaVest Asset Management, of which it holds 10 per cent.

The bank would let the two compete in the market but would continue to support both with its distribution channel.

Phuemphol Prasertlum, president of PrimaVest, said that although he didn't know about this deal before, he wasn't concerned about rivalry with AJF under support from the bank.

"However we have to discuss with executives about strategy and a clear direction of where the company is heading," he said.