Friday, November 09, 2007

Will DBS bid for TMB resemble what happened between Temasek and Shin Corporation?

Will DBS bid for TMB resemble what happened between Temasek and Shin Corporation?

Deutsche Bank and DBS Group Holdings made a counter offer for new shares being sold by TMB Bank, the Thai bank said, in an attempt to trump a bid by ING Groep NV.

TMB's board is reviewing the joint proposal and may identify the winning bidder today, Chairman Somchainuk Engtrakul said by phone from Bangkok. The bank, Thailand's fifth-largest, is planning to sell 35 billion baht ($1 billion) of new shares to stakeholders, an amount almost equivalent to TMB's market value.

ING and DBS are vying for the stake as TMB rebuilds its capital and adds more branches and services. TMB, formerly known as Thai Military Bank, also needs the funds as it sets aside more for bad loans after Thailand's consumer confidence fell to a five-year low following a military coup last year.

“TMB may not be a strong bank in Thailand, but it's not terrible,'' said Korawut Leenabanchong, who helps manage the equivalent of $2.5 billion at UOB Asset Management (Thai) in Bangkok. “It has branches to build banking services on.'' ING spokeswoman Karen Williams, Deutsche Bank's Mike West and Eileen Lau from DBS declined to comment.

DBS is TMB's second-largest shareholder with a 16.1 percent stake, and Thailand's Finance Ministry is the biggest investor. The stock purchase is a reversal of DBS's decision to hold back on additional investments in TMB, as Singapore's biggest bank seeks greater control. It will also give Deutsche Bank, Germany's largest, a presence in Thailand's commercial banking industry.

TMB asked the Stock Exchange of Thailand to suspend its share while its board considers a bid from an unidentified group of investors. The board will make a decision and the bank will hold a press conference, Thai Finance Minister Chalongphob Sussangkarn said. “It's not necessary for the board to choose only one partner,'' he said. “It can be mixed. This is up to the board.''

The minister said Oct. 8 that ING, the largest Dutch financial-services company, will invest in TMB after DBS said it won't pump in more funds. DBS said Sept. 19 it decided not to invest further after failing to get assurances that it would have “sufficient management control.''

DBS said in an Oct. 26 statement it took a S$38 million ($26 million) so-called impairment charge on its TMB investment. The Thai bank had posted its biggest quarterly loss in seven years. TMB Bank rose 1.9 percent to 1.58 baht. The stock has fallen 36 percent this year, compared with a 21 percent gain in Thailand's SET Banking Index.
If DBS does win the bid, will the bad blood left behind between the Temasek & Shin Corp saga be factor in its success in Thailand?