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Published on October 20, 2007

The bank's stock closed at Bt1.73 yesterday.

Given its third-quarter loss, TMB Bank announced it would boost capital by Bt35 billion by issuing 25.1 million shares at Bt1.40 each. There is wide expectation that the Netherlands' ING Group will buy the bank's majority stake via the recapitalisation.

The price was about 30 percent lower than the earlier market price.

KGI Securities (Thailand) said yesterday that the discount would brings about a big dilution effect for existing shareholders.

"If this [Bt1.40 price] is true, it would be very negative news for TMB's share price, as the dilution would be tremendous  at more than 57.4 percent from the issuance of 25 billion new shares," the securities firm said.

KGI said the dilution could potentially cut TMB's book value to about 1.5 times and its fair value down to Bt1.50-Bt1.70 per share.

The bank said in its statement to the Stock Exchange of Thailand that it would increase registered capital from Bt186 billion to Bt437 billion. A total of 25.1 billion shares with a Bt10 par value will be allocated, but the shares will be sold at Bt1.40 apiece.

 Of the new shares, 10.97 billion will be offered to a strategic partner and another 2 billion to Thai NVDR. A total of 11.9 billion shares will be offered in a private placement to existing shareholders, including 5.6 billion to the Finance Ministry.

Though the bank did not disclose the name of the strategic partner, many have expected ING Group to take a majority stake in TMB.

Earlier, Finance Minister Chalongphob Sussangkarn said ING Group would soon consider injecting capital into the bank.

TMB posted a consolidated third-quarter net loss of Bt2.54 billion, due mainly to an impairment loss in the second quarter, the bank said in its filing to the Stock Exchange of Thailand.

In the nine-month period, its net loss was Bt20.687 billion  compared to a net profit of Bt4.6 billion in the same period last year.

In the second quarter of this year, it recorded a net loss of Bt18.367 billion.

"Net losses in the third quarter and the first nine months are due primarily to the second-quarter loss on impairment of goodwill totalling Bt12 billion in respect of the business transferred from DBS Thai Danu Bank and the Industrial Finance Corporation of Thailand.

 "In addition, the bank set aside loan provision in the amount of Bt4.4 billion in the third quarter and Bt12.6 billion during the first nine months," the bank said in the filing.

The Nation