TMBThanachart Bank (ttb) has denied rumours of a potential merger with Krungthai Bank (KTB), noting its two largest shareholders are private companies that hold a combined stake greater than that of the government sector.
For its part, KTB informed the Stock Exchange of Thailand on Friday the news report by local media is untrue. The bank's board has not initiated nor assigned management to take any action related to a merger, according to KTB.
"Given ttb's shareholding structure, with Thanachart Capital [TCAP] and ING Bank as the two largest shareholders, each holding a stake of more than 20%, a merger is not possible," said Piti Tantakasem, chief executive of ttb.
Thanachart Capital is the largest shareholder of ttb, holding 24.42% of the bank's total registered capital, followed by ING Bank N.V. at 22.78%. The Finance Ministry is the third-largest shareholder with a 11.67% stake.
Local media reported yesterday a merger between KTB and ttb was possible, as the government's significant shareholding in both banks could lead to a deal.
If a merger occurred, it would increase the total assets of the new entity, potentially making the entity the country's largest financial institution.
In response to the rumours, Mr Piti cautioned stock investors to verify any information carefully, as it could influence stock prices and benefit certain parties.
He also sent an internal memo to employees letting them know the merger rumours were untrue and ttb is not in the process of merging with any bank.
The bank's board of directors has not considered nor authorised any actions regarding a merger, and a merger is absent from ttb's five-year strategic plan, said Mr Piti.
"Our key mission at ttb is to 'Make Real Change' -- creating meaningful improvements to the financial well-being of our more than 10 million customers. We are doing this through our Ecosystem Play growth strategy, which focuses on customer segments where we have expertise," he said in the memo.
The bank is also undergoing a comprehensive organisational transformation to enhance its capabilities, strengthen competitiveness and improve the financial experience for customers.
This transformation will support sustainable growth for ttb's customers, partners and stakeholders, as employees must collaborate to achieve these goals, said Mr Piti.
Both KTB and ttb are classified as Domestic Systemically Important Banks (D-SIBs) under the Bank of Thailand's framework. There are six D-SIBs in Thailand, with the other four: Bangkok Bank, Kasikornbank, Siam Commercial Bank and Bank of Ayudhya.
Shares of ttb surged by as much as 3.65% to 2.2 baht in early morning trade yesterday, but eased to finish at 1.95 baht by midday, up 1.56%. KTB closed at 23.60 baht at noon, up 0.43%, easing from a morning peak of 24 baht.
Kanjana Chockpisansin, head of research for the banking and financial sector at Kasikorn Research Center (K-Research), said commercial banks have maintained sound operational results and financial positions. However, subdued economic conditions and pressure to restructure debts have emerged as significant challenges.
"The uneven economic recovery has made it difficult for banks to grow their revenue, while they are also under pressure to reduce costs," she told the Bangkok Post.
Commercial banks' liquidity coverage ratios, capital gains and reserves remain solid. However, they face challenges in terms of declining asset quality, as non-performing loans (NPLs) remain elevated.
K-Research forecasts the sector's overall NPL ratio will range from 2.65% to 2.85% of total outstanding loans this year, compared with 2.7% at the end of 2024.
Chalie Kueyen, bank analyst at KGI Securities (Thailand), said both KTB and ttb have maintained solid profitability.
"Sometimes banks don't need to operate on a large scale, requiring agility instead," she said.