TMBThanachart reported the result of repurchase transaction of AT1 debt instrument from overseas market which came out as plan, supporting funding cost management without significant impact on its high capital position.

On 4 November 2022, TMBThanachart Bank Public Company Limited or TMBThanachart has notified the Stock Exchange of Thailand on the results of the partial repurchase of additional Tier 1 capital debt instruments (AT1 debt instruments) issued and offered overseas, by making a tender offer prior to its maturity date.

Mr. Piti Tantakasem, CEO, mentioned “The Bank had made a tender offer from 26th October 2022 to 3rd November 2022 and had repurchased the AT1 debt instruments at a total value of US$ 125,373,000 which exceeded the initial plan of US$ 120,000,000. This is because the feedback from investors were better than expected and the Bank saw this as an opportunity. Therefore, the Bank decided to slightly increase the repurchased value, considering that it is still within threshold and is beneficial to funding cost management without significant impact on capital position as the Bank has always maintained robust capital level.

When combined the repurchased value from the tender offer transaction with the AT1 debt instruments that were previously repurchased in the overseas open market (Open Market Repurchase) of US$28,960,000, the total value of the repurchased AT1 debt instruments will be US$ 154,333,000, representing 38.58% of the aggregate principal amount of the Notes outstanding.

This repurchase transaction will not give an impact on the Bank's Common Equity Tier 1 Ratio (CET1). And initially, the Bank estimates a reduction of no more than 0.4% or 40 basis points in the Capital Adequacy Ratio (CAR) and the Tier 1 Capital Ratio (Tier 1). Given the CAR ratio and Tier 1 ratio as of the 3rd quarter of 2022 at 20.0% and at 16.0% respectively, such a decrease will have no impact on maintaining the minimum capital requirements for banks under the D-SIBs group set by the Bank of Thailand at 12.0% and 9.5%, respectively.

Mr. Piti Tantakasem concluded “Under interest rate hike cycle, the Bank has focused on funding cost efficiency. The Bank also had a preparation ahead of interest rate trend. Starting since the end of last year, the Bank has increased time deposit as this would help reduce deposit competition and allow the Bank to manage deposit cost effectively once entering rising rate cycle. We have also adjusted our investment portfolio to be more flexible to take opportunities from market condition and interest rate trend. Apart from these initiatives, there are more future activities the Bank has in pipeline as part of our funding optimization plan. This will be a positive factor to support interest income and to effectively manage interest expenses.”