TMB today announced that its Board of Directors has approved the Bank’s plan to reduce the par value of its 43.5 billion ordinary shares, currently at 10 Baht per share to 0.95 Baht per share. This accounting exercise will clear retained losses from TMB’s balance sheet and will not have any impact to the Bank’s capital base which is strongly supported by a capital adequacy ratio (CAR) of 18.6%. The implementation will open the way for TMB to start paying dividends to shareholders when it makes a profit.
TMB has received all necessary regulatory approvals and will raise the matter for final approval by its shareholders during the Extraordinary General Meeting set for 24 June 2010.
The accounting exercise of ordinary share par value reduction will have no impact to the total number of shares, earnings per share or the operating foundation of the Bank. The share discount of 303.1 billion baht and retained loss of 101.05 billion baht will be wiped out from the Bank’s balance sheet through this accounting mechanism.
“We are delighted that regulators concerned have given the green light to this par value reduction exercise, which is great news for TMB shareholders. Once it is complete and the Bank has cleared retained losses, we will have a clean balance sheet that puts TMB in a position to begin paying shareholders dividends when the Bank makes a profit,” said Mr. Boontuck Wungcharoen, Chief Executive Officer, TMB Bank. “Moreover, the implementation also reflects the overall strength of the Thai banking industry and helps build confidence among Thai and foreign investors.”
The process of reducing the par value of TMB’s ordinary shares is now underway and is expected to be complete by June 2010. There will be no effect on the Bank’s capital which is currently at 67.91 billion baht. TMB shareholders equity is 47.93 billion baht.
In conjunction with the ordinary share par value reduction, TMB will introduce the “TMB Performance Share Bonus Program” program for all staff. An international best practice, the program — contingent upon performance — will put TMB’s total compensation on par with the market in addition to serving as a staff retention mechanism. Mandatory for senior management and optional for other levels of TMB staff, the TMB Performance Share Bonus Program aligns individual performance with the Bank’s overall performance. It’s a strong motivation for TMB staff, especially senior management, to consistently improve the Bank’s operations and performance while taking initiatives to create additional value for TMB in the future. This will enhance the total shareholder value of TMB.
TMB Bank Public Company Limited
Founded on 8 November 1957, TMB Bank Pcl. operates a commercial banking business under a license granted by the Ministry of Finance, and with consent given by the Bank of Thailand. It also operates a securities business licensed by the Ministry of Finance and agreed to by the Securities Exchange Commission.
TMB aims to respond to the needs of its clients through its 458 branch network, 100 foreign exchange centers 2,278 ATMs, as well as electronics banking systems. Its business encompasses commercial banking, offshore banking, investment banking, and other businesses as permitted by the regulatory authorities, including acting as an insurance agent for its alliance insurance companies.
Listed on the Stock Exchange of Thailand, TMB is the sixth largest bank, by total assets, in Thailand. As at 31 March 2010, its total assets are valued at THB 560,028 million.
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