Krung Thai Bank is planning to raise Bt35.2 billion ($1.1 billion) from a rights issue, which it said will help strengthen its financial status.
The Bangkok-based bank announced late last week that it will offer 2.8 billion new shares to existing shareholders at the offering ratio of four existing shares to one new ordinary share. The rights offering price will be Bt12.60 a share, which represents a 25.9% discount over Thursday’s close of Bt17. The stock fell 2.4% on Friday, the day after the announcement, to end at Bt16.6. The Thai stock market was closed yesterday for a public holiday.
The record date for the rights issue will be August 30, and the deal will need approval from existing shareholders at an extraordinary general meeting on September 21.
If there are shares remaining after the first round allocation to the existing shareholders, the bank will allocate a second round to shareholders that subscribe for the newly issued ordinary shares in excess of their rights, Krung Thai Bank said in a statement on Thursday.
It said it plans to use the proceeds to “enhance and promote the continuous growth of the bank’s businesses”.
According to Bualuang Securities, the capital raising will boost the bank’s capital adequacy ratio to 15.2% from 12.9%, and its tier-1 capital will rise to 10.25% from 7.9%.
“The much-expanded capital base would enable KTB to approve more and bigger loans to state agency and SOE [state-owned enterprise] projects next year,” it said in a research report on Friday. “Because of the role that KTB plays as financier to state agencies and helping to implement government policy objectives, we anticipate accelerated leading growth next year.”
In July, Krung Thai Bank reported net income of Bt7.3 billion for the second quarter, a 40.1% jump from a year earlier. As of June 30, the bank’s tier-1 capital was Bt119.6 billion, or 7.9% of its risk-weighted assets, which was higher than the minimum rate of 4.25% required by the Bank of Thailand, it also noted at the time.
Elsewhere, Kasikorn Securities said in a report on Friday that it was positive on the capital increase, as it should remove one of the bank’s key overhang issues.
So far this year, the bank’s stock has gained 15%, while the benchmark SET Index has climbed about 19% during the same period.
The government currently owns about 55% in Krung Thai Bank through the Financial Institutions Development Fund, according to Bloomberg data. The bank started operations in 1966 after the merger of two government-owned banks, Kaset Bank and Monton Bank.
