In February 1999, TDB and DBS
announced a capital raising exercise which is expected to raise between
Bt12 billion and Bt17 billion to allow TDB to meet BOT's provisioning
guidelines ahead of Year 2000 as well as for future expansion of
business. This exercise consists of a rights issue of shares, an issue
of Capital Augmented Preferred Shares (CAPS) to be placed in Thailand,
and CAPS with a convertible feature to be placed with DBS. TDB's total
capital adequacy ratio is expected to increase to at least 17.45 percent
as a result.
To counter the increase in NPLs, credit controls have
been centralised and internal processes revised in line with
international standards. Credit officers have been retrained and a
'hospital bank' formed to provide financial restructuring for customers
with viable businesses who face temporary problems. Experienced staff
have been recruited to assist in the NPL resolution process. In
addition, a Problem Loan Committee has been formed to review existing
and potential NPLs, provide restructuring guidelines and decide on the
ultimate course of action. Given the measures taken by TDB, the Thai
Government and BOT, NPLs are expected to be contained in 1999 and
diminish thereafter.
Efforts have been under way to more meaningfully align
the operations of TDB with those of DBS to leverage best practices and
facilitate coordination of business policies, customer initiatives and
support services. Working with external management consultants, a new
organisation structure was announced which more closely aligns TDB with
its customer base. The end result is expected to be a bank that is
better positioned for the Thai financial services market and better able
to address the unique needs of its customer segments, once the crisis
has passed.
