Bangkok--13 Mar--BankThai
Phirasilp Subhapholsiri, President of BankThai, reveals that BankThai’s capital increase is to be made in 2 phases — firstly, the private placement of 556 million shares to TPG Newbridge and 175 million shares to other investors, which is part of the 940 million shares already approved by the sharesholders, and secondly, a rights offering of 2,225 million shares at 1:1 ratio, which will be proposed by the bank’s management to the board of directors and shareholders for approval later.
This capital increase is to strengthen BankThai’s capital base, which has been revised accordingly, due to many extraordinary items affecting the Bank’s capital, resulting in the Bank’s BIS ratio being lower than BOT’s requirement, but not a negative capital base as reported by many newspapers. Moreover, the Bank’s BIS ratio would have been at 11% - 12%, had no such extraordinary items occurred.
The extraordinary items which BankThai had to realize immediately were: (1) a shortfall of Baht 3,729 million in the actual compensation relating to CAP management, which is less than the accrued amount and, (2) the partial provisioning of IAS39 as allowed by BOT. It should be noted that with just the two items above, the Bank’s BIS ratio would have been at 7% - 8%. However, on account of having strategic investors co-investing in the Bank which requires a full provisioning, the Bank decided to fully reserve the entire IAS39 provision of Baht 1,900 million, plus the cost of a warrant buy-back of Baht 1,146 million; hence, resulting in the current BIS ratio of 6.14%. As such, the management of BankThai has proposed the aforementioned revised plan to enhance the Bank’s BIS ratio.
Phirasilp further states that the normal operating performance of the Bank has improved dramatically, or approximately 97% from the previous year, evidencing the Bank’s capacity and growth potentials. Therefore, BankThai will certainly benefit from having a larger capital base with a BIS ratio of 13% - 14% for further growth, with existing shareholders sharing the opportunities as derived from future earnings.