Thursday, September 23, 2021

business

Banks to step up on car, home loans after merger


Thanachart Bank and TMB Bank, after the impending merger, will focus more on mortgage and car loans as both offer high return and where their strengths lie, said TMB Bank's chief executive officer Piti Tantakasem.

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The merger process between the two banks, with a total customer base of 10 million, has entered the final stage. 
In the new shareholding structure, Thanachart Capital (TCAP) will hold 20 per cent of total shares, followed by ING Bank, which acquired TMB in 2008, with 21.3 per cent. Of the remaining shares, the Finance Ministry will hold 18.4 per cent, Scotiabank (BNS) 5.6 per cent and minority shareholders 34.3 per cent.
According a TMB Bank statement dated September 30, the bank has entered into an agreement to sell its shares in Thanachart Fund Management (TFUND) to Prudential Corporation Holdings Limited (Prudential), an affiliate of Eastspring Investments (Eastspring), the Asian asset management business of Prudential pcl.
This transaction shows the new bank’s commitment to mutual funds' open architecture strategy. TMB, intends to record the sale by the end of 2019 after it has sealed the merger with Thanachart Bank.
Under the agreement, Thanachart Bank and the Government Savings Bank (GSB), both holding TFUND shares with ratio of 75 per cent and 25 per cent, have agreed to sell their shares to Prudential. The transaction value is expected to be at least Bt8.4 billion.
Thanachart Bank’s sale of TFUND shares, in accordance to the merger plan, will take place after the merger between TMB and Thanachart Bank is completed, Piti said.
Thanachart Bank will sell a first lot consisting of 25.1 per cent of TFUND (out of its 75 per cent holding) whereas GSB will sell all of its 25per cent of TFUND to Prudential. The total value of these transactions will be approximately Bt4.2 billion.
After the transactions are completed, Prudential will hold 50.1 per cent of the shares in TFUND while Thanachart Bank will hold 49.9 per cent of TFUND.
“Currently, TMB holds a 35 per cent stake in TMBAM Eastspring. After the acquisition of Thanachart Bank’s shares, TMB will hold 49.9 per cent of TFUND indirectly. Both TMB and Eastspring have planned to merge TMBAM Eastspring and TFUND in 2021. Following the merger, the new company will rank fourth among mutual funds asset management firms with approximate assets under management (AUM) of Bt650 billion (as of August 2019). 
Within five years, TMB has an option to sell its entire stake in the new company to Prudential in order to re-affirm its commitment towards mutual funds' open architecture strategy.
“Additionally, the TFUND share sale reflects the actual premium that TMB has to pay in order to merge with Thanachart Bank. TMB will raise funds of approximately Bt130 billion to acquire shares in TBANK. This value is based on the book value of Thanachart Bank after restructuring (with TBROKE and TFUND as its subsidiaries), which is Bt121 billion plus an estimated Bt9 billion premium (including the premium cost from both subsidiaries).
"This way, the 75 per cent sale of TFUND with at least Bt6.3 billion in value will compensate the paid premium. As a result, the real premium cost that TMB has to pay will be significantly lower than Bt9 billion, allowing TMB to achieve its objective of buying Thanachart Bank’s shares at a fair valuation.”
In its financial statement as of December 31, 2018, TMB intended to recognise the sale transaction from Thanachart Bank, which will become its subsidiary, for the first lot of 25.1 per cent share sales at the value of approximately Bt2.1 billion.
Piti concluded: "The merger will take place in 2021. Meanwhile, customers of both TFUND and TMBAM Eastspring will still be able to hold the mutual fund products and conduct transactions as normal. The merger will increase the capacity in offering more diverse services and products for customers.
The merger between TMB Bank and Thanachart Bank will take place in 2021 as well. Customers of both TMB Bank and Thanachart Bank will be able to continue using investment products and other services offered by both banks in all channels as usual".

Published : October 01, 2019