TMB Bank Public Company Limited recognizes that good supervision is increasingly crucial and beneficial to the Bank. It continuous creates value added, enhances stability and permanence of the Bank. Domestic and overseas investors pay more and more attention to the governance factor of each company such that it becomes a part of an investment decision. Investors’ willingness to give higher share value depends on the corporate governance of such company.

Hence, the reorganization and management directives of the Bank post the integration of the 3 institutions greatly emphasizes on the corporate governance. Primarily the Bank must take into consideration the following guidelines.

• To conduct business in compliance with the regulations stipulated by the authority
• To define appropriate scope of responsibility and internal control within each section
• To develop corporate governance system compatible to the international banking standards

In order to achieve good corporate governance, the Bank establishes directions, strategic framework and guidelines for the operations post integration as follows:

• Formulating a strategy that will lead to success by enabling precise performance measurement on the organizational level as well as the management and the employee levels
• Assigning responsibility, authority and establishing clear approval procedures from the employee to the Board of Directors of the Bank
• Creating mechanisms to respond and coordinate between the Bank’s Board of Directors, senior management as well as the Audit Committee
• Installing a sound internal control system with well-defined line of authority for internal audit; appointing external auditors with suitable scope; employing risk management system which includes verification between the business line and the back offices
• Establishing monitoring to ensure strict compliance with the official regulations and the Banks’ own regulations with regards to transactions of affiliated persons such as shareholders, management and/or businesses in which the Bank invests with an emphasis on public disclosure and transparency
• Adequate and timely disclosure of Bank’s internal and external information
• Instituting remuneration suitable to employees in every level that commensurate with the Bank’s performance while the increases of the remuneration corresponded to the growth rate of profit
• Creating awareness among the employees of responsibilities and code of conduct to promote better governance culture within the Bank

Management Structure

To organize the Bank’s management structure to correspond with corporate good governance is the priority of the Bank. It is to augment stable progresses post integration. The Bank undertook reorganization on the Board level as well as the management level. This is to create flexibility in formulating policies, operations and monitoring as well as compliance with the stipulated regulations. Furthermore, in the appointment of any director or executive to participate in each committee, suitability of experience, capability, duties and independence were carefully considered.

Implementation to Comply with Corporate Good Governance

The implementation on corporate good governance of the Bank has been in progress prior to the integration and is continued post the integration between the Thai Danu Bank (Public) Company Limited and the Industrial Finance Corporation of Thailand at the end of 2004. It is summarized as follows:

• Strict compliance with the regulations of the Bank of Thailand regarding structure of the Bank’s Board of Directors to promote corporate governance is strictly observed. Subsequent to the integration, the organization was restructured to accommodate the Office of Corporate Governance and Compliance to be directly responsible for good governance.
• The 15-point guidelines under the directions and regulations of the Stock Exchange of Thailand are emphasized. The main theme is the shareholder’s right.
• Equal treatment for all shareholders
• Consideration given to stakeholders
• Disclosure and transparency
• Responsibilities of the Board of Directors
• The Bank’s Office of Corporate Governance and Compliance shall be independent and has the duty of reporting on the compliance with the official regulations as well as on the corporate governance and must report to the Audit Committee upon any changes to the official stipulations. This should be accompanied by suggestions on procedural changes that the Bank should make to comply with such regulations. For example, any issue regarding independent directors.
• Participation with other commercial banks in the ROSC (Report on the Observance of Standards and Codes) project, in particular on the anti-money laundering area which complement the country’s governance.
• The Bank recognizes the importance of the corporate social responsibility (CSR) by monitoring and participating with various independent organizations on the potential activities.
• Review and improvement on code of conduct as well as on business conduct are set befitting to the management and each level of employees.

Result of the Corporate Governance Report of Thai Listed Companies (CGR) 2006 organized by the Thai Institute of Directors (IOD) with the support of the Office of the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET)