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Finance Ministry weighs costs, benefits of bank merger

Finance Minister Apisak Tantivorawong says the Finance Ministry is considering the costs and benefits of the proposed amalgamation of TMB Bank and Thanachart Bank. (Bangkok Post file photo)

The Finance Ministry is considering the costs and benefits of the proposed amalgamation of TMB Bank and Thanachart Bank (TBank), says Finance Minister Apisak Tantivorawong.

The cost-benefit analysis will determine whether the ministry will subscribe to newly issued shares after a consolidation, he said.

Given that TMB is not a strategic investment for the ministry, benefits from any integration for TMB's shareholders will be a priority for the ministry, Mr Apisak said.

The potential integration of the banks is a step closer to becoming a reality after a consolidation plan was submitted to the ministry.

This week a source at TMB said the deal is expected to be concluded this month, but the consolidation process need not be completed under this government's regime.

Both banks' major shareholders began studying the benefits of a possible integration after the cabinet approved tax incentives for banking mergers and acquisitions in April 2018 with the goal of creating "champion" banks that can compete with foreign banks and regional rivals.

The Finance Ministry is the largest shareholder in TMB, with a 25.9% stake, while ING has a 25% stake. Thanachart Capital holds a 51% stake in TBank, and Canada's Scotiabank owns the remainder.

TMB is the country's seventh-largest bank, with assets of 892 billion baht, while TBank is sixth, with assets worth 1 trillion baht at the end of last year.

Mr Apisak said the consolidation plan was sent to him on Feb 5, but the costs and benefits have yet to be broached.

"I haven't seen any mention of the integration's benefits," he said. "All I've received is a briefing."

Encouraging local financial institutions to merge is a ministry priority, he said, as small banks shoulder higher operating costs than large ones.

The merger would help boost banks' efficiency, Mr Apisak said.

TMB shares closed yesterday on the Stock Exchange of Thailand at 2.26 baht, unchanged, in trade worth 301.8 million baht.

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