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Army seeks to dilute holding in TMB

Army seeks to dilute holding in TMB 

THE Army is likely to reduce its 30 per cent stake in Thai Military Bank by
inviting a strategic partner to help reorganise and reform the institution,
said army chief Gen Surayuth Chulanont. 

The announcement, made during the army chief's address to the Foreign
Correspondents Club of Thailand on Wednesday, confirmed his commitment to
a higher level of professionalism to the armed forces. 
Democratic-minded Surayuth, who is also TMB chairman, said: ''We are trying to
revise and readjust TMB. It's quite unthinkable, in a sense, that the military
is actually involved in the banking business.'' 

Established in 1957 as a financial fortress for the Thai armed forces, TMB has
since diversified its customer base and now offers the same range and standard
of customer services as other commercial banks. 

However, the economic and banking crises have hit TMB and other commercial
banks hard, requiring massive recapitalisation to write off accumulated bad
debts and put them back on a sound footing. 

The Army holds 21.09 per cent of TMB, the Navy 3.73 per cent and the Air Force
3.14 per cent. The Supreme Command holds a further 0.83 per cent, with
and others also owning a small share. 

''What we're trying to do is reduce our share in TMB and we'll try to get, as
they say in the banking business, 'strategic partners', to help us,'' said
''I think it won't be too long before this happens.'' 

By reducing the armed forces' stake in TMB, Surayuth did not suggest that the
military was going to pull out of the bank altogether, but would see a
of its shares after recapitalisation. 

Earlier, there were reports that TMB might seek tier-1 recapitalisation
under the government's Banking Restructuring Programme. TMB president Thanong
Bidaya said it would need an injection of at least Bt10 billion in fresh
capital to fulfil the authorities' accounting standard by 2000. 
''The military is definitely not pulling out of TMB, but there's a possibility
that its stake will be diluted,'' said TMB executive vice president Akadej
Akadej refused to give a firm commitment on whether the bank would enter the
government's tier-1 capital programme. 
''We may or may not seek the tier-1 recapitalisation support. But the
perception right now is this might not be necessary. Even if we do seek the

support, we won't be asking for that much,'' he said. 
TMB, according to Akadej, has maintained a capital adequacy ratio of 10 per
cent, of which 7 per cent accounts for tier-1 capital and the remaining 3 per
cent tier-2 capital. The bank has applied for tier-2 capital support, which
should not exceed 4.25 per cent of the capital adequacy ratio. 
Akadej said TMB's strong points were its broad customer base and the strong
collateral of its clients. 
The Nation, Agencies