Thailand’s Thanachart Bank and TMB Bank have agreed to merge with a valuation of $4.6 billion. The merger marks the first prominent Thai bank consolidation since 2013, media reports said. 

With the merger, Thanachart Bank will have total assets valued at 1.9 trillion baht in addition to 10 retail million customers. Reports said that the bank will become the sixth-largest lender in Thailand. 

Prior to this, a major acquisition took place when Mitsubishi UFJ Financial Group bought Bank of Ayudha in 2013. TMB Bank CEO Piti Tantakasem told reporters at a news conference “The integration will furnish the new bank with enhanced capability to develop better products and services in the digital age.” 

Under the terms of the agreement, all shares of Thanachart Bank’s subsidiary Thanachart Broker and 75 percent of Thanachart Fund will be transferred to TMB Bank. The buying price of Thanachart Bank’s shares will be settled in cash or a cash equivalent, TMB Bank said. 

The merger talks have been taking place since last year. TMB Bank said that a non-binding agreement has been signed for the merger. According to central bank data, Thanachart Bank assets totalled $32.3 billion as of June — and TMB Bank  assets were valued at TB896 billion. 

Thailand’s government is focusing on encouraging small and medium size lenders to merge in order to gain a competitive advantage. The Thanachart Bank TMB Bank merger is anticipated to encourage more acquisitions and financial mergers across the country. 

Both banks said that the merger will produce an extensive customer base and strengthen their position in the market. In addition, it will ensure a ‘larger investment pool’ in order to deal with the rising competition. 

TMB Bank has 408 branches while Thanachart Bank has 498 in Thailand. The banks plans to consolidate branches with close proximity in an effort to cut costs. However, they have no plans to carry out layoffs.