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DBS fails in joint bid to raise Thai bank stake
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| Grace Ng |
Thu, Nov 08, 2007
The Straits Times
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DBS Bank's 11th-hour attempt to secure a larger stake in Thailand's TMB Bank yesterday has failed.
News of the Singapore bank's interest in pumping more money into TMB is as much a surprise to the market as its decision to team up with Deutsche Bank to make a joint bid for a 25.2 per cent stake in the Thai lender.
Just two months ago, DBS had declared that it would not inject fresh funds into TMB, leaving the negotiating table clear for Dutch financial group ING.
But yesterday, DBS and Deutsche submitted a counter-bid that was higher than ING's offer. This led to a delay in the TMB board meeting, which stretched to about 8.30pm last night before a decision was announced.
| ING emerged victorious with a bid of 1.4 baht per share, according to sources.
DBS, which holds 16 per cent of the money-losing Thai bank, had teamed up with the German bank to make a $618 million offer.
This works out to 1.6 baht per share for at least 13.11 billion new shares in TMB, Reuters reported yesterday.
Media reports of DBS' unexpected move surfaced during afternoon trading yesterday and sent the bank's shares tumbling 50 cents to close at $21.
Investors feared that a larger stake in TMB, which suffered a huge net loss of 20.7 billion baht (S$881.8 million) in the first nine months of this year, might prove an even bigger drag on DBS' bottom line.
DBS had already been forced to write down the value of its TMB stake by $38 million during the quarter ended Sept 30 - the second quarter of write-downs linked to the Thai lender. DBS also warned that it might have to cut the value further.
TMB is carrying out an exercise to raise capital so that it can get back on its feet and to clear bad debts. It plans to sell 25 billion new shares at 1.4 baht a share to raise 35 billion baht.
DBS had earlier baulked at pumping more money into TMB, saying the Thai bank had refused to allow it sufficient management control. It had reportedly sought an overhaul of TMB's management, but was rebuffed.
'DBS had previously stated that it was committed to Thailand and wanted to play a greater role in TMB. But prevailing circumstances in mid-September were not conducive to DBS taking on a greater management role at that time,' an informed source told The Straits Times.
But the situation changed after DBS teamed up with Deutsche to bid for a larger stake, which might have given them more board seats.
This failed bid in Thailand is the latest in a string of reportedly unsuccessful attempts by DBS to snap up bank stakes in regional markets such as South Korea and China.
graceng@sph.com.sg
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