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Published on April 9, 2008

At the moment, the financial markets are speculating over two names. The first candidate is Boontuck Wangcharoen, a former senior executive of KasikornBank in charge of corporate banking. The second is Khan Prachuabmoh, now the managing director of the Government Housing Bank.

While ING Group of the Netherlands, now the major shareholder of TMB, is believed to be supporting Boontuck, the Ministry of Finance is backing Khan. This follows the resignation of Suphak Sivalak as president. Two other top level management executives, CFO Tanet Phutrakul and COO Kraitip Krailuk, have also resigned from TMB to pave the way for a radical restructuring.

We will know for sure what will transpire at TMB on April 25 when the bank holds its general shareholders' meeting. At the meeting, TMB is expected to propose a plan to reduce its retained losses worth Bt100 billion by 2010 through par reduction and profit. TMB expects net profit this year of Bt4 billion to Bt5 billion.

It will be a testing time for TMB, which is, apart from Krung Thai Bank, still considered a financial arm of the Thai government. The direction of TMB will become clearer by way of the influence of ING or the Ministry of Finance. If Boontuck becomes president, TMB will be moving one direction. If Khan takes the helm, the bank will go in another.

But we have also heard that the Ministry of Finance is waiting to field Dr Thanong Bidaya, the former finance minister, as chairman of TMB. Sathit Limpongphun, a deputy permanent secretary of the Ministry of Finance, is now serving in this position. Thanong is locked up by law which prevents a finance minister from holding a position in a financial institution within two years after leaving office. But in a few months' time, he will be free to return to TMB, where he used to serve as president.

Obviously, ING does not want to repeat the mistake of DBS Group of Singapore which failed to muster management influence at TMB. Eventually, DBS agreed to cave in. But ING has injected a huge amount of capital into TMB. So it must make sure that it has a big say in running the bank. To do so, it must succeed in entertaining both the Ministry of Finance and the military establishment, who are the traditional shareholders.