Government Guarantee on Bank Deposits

[James Roderick]

In some countries deposits held in local banks are guaranteed by the Government , up to a certain amount. If the bank were to fail or suffer a major cash crisis, the Government guarantee that your money will be repaid. In Singapore  the deposit  guarantee  amount is $250,000 Singaporean dollars. Anything  up to and below this amount is  covered by a Government guarantee, anything above this deposit amount is not !

Can anyone tell me if a similar government guarantee operates in Thailand - and if it does what limits apply  ?

 

Many thanks in advance !

[macahoom]

I believe you have a couple of incorrect facts in your post:

 

1. The guarantee amount in Singapore is currently SGD 50,000, not SGD 250,000.

2. The amount in Singapore is not guaranteed by the government. It is guaranteed by a company: Singapore Deposit Insurance Corporation (SDIC).

 

In Thailand, the amount guaranteed currently is 10 million baht. That is due to drop to 5 million in August 2019, and then to 1 million baht in August 2020.

 

 

[NCC1701A]

http://www.dpa.or.th/ewt_news.php?nid=320&filename=index___EN

7 hours ago, James Roderick said:

Can anyone tell me if a similar government guarantee operates in Thailand

 

Edited November 1, 2018 by NCC1701A

[farang62]

Another reason not to keep funds in a Thai Bank.

[giddyup]

1 minute ago, farang62 said:

Another reason not to keep funds in a Thai Bank.

1 million will cover the 800,000K, so what's the problem, or is it just more scaremongering?

[CALSinCM]

10 hours ago, macahoom said:

In Thailand, the amount guaranteed currently is 10 million baht. That is due to drop to 5 million in August 2019, and then to 1 million baht in August 2020.

This foreshadows where banks believe they are heading.  Pretty much all banks will use depositor's funds to 'make their banks whole' during the next financial crisis.  They'll rape depositors before pleading with the government and IMF to fund them.  Banks should be allowed to fail in order to clear out the weak.  Most banks are over-extended and over-leveraged while they make risky casino-like investment.  If you have money in the bank, don't put more than 1M THB into any one institution.  The entire banking industry needs to be over-hauled, but that isn't going to happen.

[RichardColeman]

1 hour ago, giddyup said:

1 million will cover the 800,000K, so what's the problem, or is it just more scaremongering?

Well, if they up the 8ook it will be.

[TallGuyJohninBKK]

Here's the Thai government website with the details of their deposit insurance program, including the amounts posted above.

 

http://www.dpa.or.th/ewt_news.php?nid=320&filename=index___EN

 

A couple things about that:

 

1. AFAIK, this current system has never really been tested in Thailand, as it only came into law AFTER the Asian Financial Crisis.

 

2. Under the rules and timelines that are laid out in their procedures, it could take several months or more for the government to reimburse should one of the covered financial institutions fail.  Unlike in the U.S., for example, where the FDIC in such cases restores funds almost immediately.

 

3. In recent years, the government has faced deadlines for significantly lowering the insured amounts, as laid out in the plans for the next several years, and ended up postponing those deadlines/reductions. So whether they'll in fact follow thru on the planned Aug 2019 and 2020 reductions (the latter down to a puny 1 million baht per account/institution), remains to be seen.

 

4. The Thai deposit insurance scheme only covers in the event of the failure of a covered financial institution. It does not cover or protect against fraud / theft etc.

 

[giddyup]

25 minutes ago, RichardColeman said:

Well, if they up the 8ook it will be.

You can live on that money for 9 months and then up it back to 800K, so it's still not a problem even if they make it 1 million. Don't want to put money in a Thai bank? Unless you can show 65K a month income, better look elsewhere to live and stop whinging about it.

[elgenon]

11 hours ago, macahoom said:

I believe you have a couple of incorrect facts in your post:

 

1. The guarantee amount in Singapore is currently SGD 50,000, not SGD 250,000.

2. The amount in Singapore is not guaranteed by the government. It is guaranteed by a company: Singapore Deposit Insurance Corporation (SDIC).

 

In Thailand, the amount guaranteed currently is 10 million baht. That is due to drop to 5 million in August 2019, and then to 1 million baht in August 2020.

 

 

What does that cover? The bank going out of business? Money pilfered by an employee?

[GalaxyMan]

11 hours ago, macahoom said:

I believe you have a couple of incorrect facts in your post:

 

1. The guarantee amount in Singapore is currently SGD 50,000, not SGD 250,000.

2. The amount in Singapore is not guaranteed by the government. It is guaranteed by a company: Singapore Deposit Insurance Corporation (SDIC).

 

In Thailand, the amount guaranteed currently is 10 million baht. That is due to drop to 5 million in August 2019, and then to 1 million baht in August 2020.

 

 

Is that going to apply per institution or per account? Is it really something to worry about with the top banks?

[manchega]

The greatest risk in Thailand to your deposits is the Thai government.....

 

I hope you have a lightbulb moment

[CMBob]

14 hours ago, macahoom said:

In Thailand, the amount guaranteed currently is 10 million baht. That is due to drop to 5 million in August 2019, and then to 1 million baht in August 2020.

 

It's been on the books to lower the amount to a million baht for 10-15 years and they delay the implementation each time it gets near to dropping below 5-10 million baht.  I'd expect the same to occur again as, in my opinion, there is no way that businesses or the wealthy would intelligently choose to keep a few hundred thousand dollars in an account that's only government-insured for $32,000.00.

[macahoom]

5 hours ago, GalaxyMan said:

Is that going to apply per institution or per account? Is it really something to worry about with the top banks?

 

It's per bank/institution, not per account.

 

If you click on the website referenced in post #3 above, there's a link to a Q&A site which explains this and much more. 

[simoh1490]

The DPA has threatened to downsize the amounts covered for many years, at the last moment they usually announce they will remain as is, I expect the same thing to happen this time around.

[toofarnorth]

Brought to mind when several years ago I opened my first bank account here and in a box near the bottom of the bank book was written 1.5 % interest . Went back a year later for a book update and the 1.5% was crossed out and re written .5%.

 

[rickudon]

The government PROMISES to refund you if the bank fails. So far i do not think they have ever had to pay out in Thailand? Depends on how much you trust the government .......

 

Iceland also guaranteed deposits in their banks before the financial crash - they reneged on that. Fortunately as i invested via the UK, the British government also covered it and i was compensated by them instead.

 

Safety is always relative.

[Shocked farang]

On 11/1/2018 at 10:01 PM, macahoom said:

I believe you have a couple of incorrect facts in your post:

 

1. The guarantee amount in Singapore is currently SGD 50,000, not SGD 250,000.

2. The amount in Singapore is not guaranteed by the government. It is guaranteed by a company: Singapore Deposit Insurance Corporation (SDIC).

 

In Thailand, the amount guaranteed currently is 10 million baht. That is due to drop to 5 million in August 2019, and then to 1 million baht in August 2020.

 

If the guarantee was lowered that shows how shaky their bank system actually is. I would never keep large amounts of money in Thai banks, above all there's nothing to stop the present government to seize assets from foreigners living in the Kingdom. Welcome to the land of smiles! 

[simoh1490]

7 hours ago, Shocked farang said:

If the guarantee was lowered that shows how shaky their bank system actually is. I would never keep large amounts of money in Thai banks, above all there's nothing to stop the present government to seize assets from foreigners living in the Kingdom. Welcome to the land of smiles! 

You have misunderstood....the DPA has insured bank accounts at a very high level for a very long time, they have tried unsuccessfully to lower those limits on many occasions over the years but have always been persuaded to leave them at the higher level. So this is not about the banking system being shaky, it's an attempt, again, to normalise the levels.

 

As for what you wrote about the government seizing bank assets, a nice lay down in a cool space may help your thought processes normalise!

[TallGuyJohninBKK]

9 minutes ago, simoh1490 said:

You have misunderstood....the DPA has insured bank accounts at a very high level for a very long time, they have tried unsuccessfully to lower those limits on many occasions over the years but have always been persuaded to leave them at the higher level. So this is not about the banking system being shaky, it's an attempt, again, to normalise the levels.

 

 

The ultimate Thai target for some time has been to get the insured deposits level down to 1 million baht... Whether they actually go there in the future as planned is a different question.

 

By comparison, the current UK level I believe is 85,000 pounds, which is roughly 3.6M baht. The current U.S. level is $250,000, which is roughly 8.2 million baht. And in the U.S. at least, I'm not aware of any plan/proposal to reduce that insured amount for the future.

 

 

[simoh1490]

14 minutes ago, TallGuyJohninBKK said:

 

The ultimate Thai target for some time has been to get the insured deposits level down to 1 million baht... Whether they actually go there in the future as planned is a different question.

 

By comparison, the current UK level I believe is 85,000 pounds, which is roughly 3.6M baht. The current U.S. level is $250,000, which is roughly 8.2 million baht. And in the U.S. at least, I'm not aware of any plan/proposal to reduce that insured amount for the future.

 

 

The insured amounts for different countries that you mention reflect the levels of consumer deposits in those countries, in Thailand for example, less than 1% of the population has over 1 million baht on deposit. I can't post a link to the following quote but it's found on the web easily enough:

 

"The Bank of Thailand has revealed this week that 88 percent of all savings accounts in Thailand have less than THB50,000 (US$1,800) in them, while just one percent have savings of more than THB1 million (US$31,200)".

 

Here's another link with the same story: https://workpointnews.com/2018/05/06/บัญชีเงินฝาก-ออมทรัพย์/

Edited November 4, 2018 by simoh1490

[TallGuyJohninBKK]

19 minutes ago, simoh1490 said:

The insured amounts for different countries that you mention reflect the levels of consumer deposits in those countries, in Thailand for example, less than 1% of the population has over 1 million baht on deposit. I can't post a link to the following quote but it's found on the web easily enough:

 

"The Bank of Thailand has revealed this week that 88 percent of all savings accounts in Thailand have less than THB50,000 (US$1,800) in them, while just one percent have savings of more than THB1 million (US$31,200)".

 

Here's another link with the same story: https://workpointnews.com/2018/05/06/บัญชีเงินฝาก-ออมทรัพย์/

 

Cold comfort if you're a farang who needs to keep 800,000 on deposit just to satisfy a retirement extension, or heaven forbid, actually has more assets/deposits in this country. Although, AFAIR, the Thai limit is per customer/per bank, so you could extend that with other accounts in other bank companies -- if you can find one willing to open an account for you without a work permit.

 

But the point is -- the Thai government's long running talk about reducing the insured deposits limits ultimately to 1 million, from a farang perspective, merely serves an an additional reason to NOT bring any larger amounts of money into the country and keep it on deposit here. Is that really the goal they're aspiring to?

 

 

Edited November 4, 2018 by TallGuyJohninBKK

[simoh1490]

9 minutes ago, TallGuyJohninBKK said:

 

Cold comfort if you're a farang who needs to keep 800,000 on deposit just to satisfy a retirement extension, or heaven forbid, actually has more assets/deposits in this country. Although, AFAIR, the Thai limit is per customer/per bank, so you could extend that with other accounts in other bank companies -- if you can find one willing to open an account for you without a work permit.

 

But the point is -- the Thai government's long running talk about reducing the insured deposits limits ultimately to 1 million, from a farang perspective, merely serves an an additional reason to NOT bring any larger amounts of money into the country and keep it on deposit here. Is that really the goal they're aspiring to?

 

 

Why is it cold comfort, the 800k is insured, end of story!

 

Why should the Thai DPA set a level that caters to only 1% of the population, currently it's set at a level that caters to less than 0.001%, it doesn't make sense to keep the levels that high just to satisfy farangs. 

[TallGuyJohninBKK]

5 minutes ago, simoh1490 said:

Why is it cold comfort, the 800k is insured, end of story!

 

Why should the Thai DPA set a level that caters to only 1% of the population, currently it's set at a level that caters to less than 0.001%, it doesn't make sense to keep the levels that high just to satisfy farangs. 

 

If the Thai banks don't care about attracting and keeping high deposit customers, then I'd certainly agree with you!

 

[simoh1490]

2 minutes ago, TallGuyJohninBKK said:

 

If the Thai banks don't care about attracting and keeping high deposit customers, then I'd certainly agree with you!

 

There's too few of them is the problem, as said, Thai's don't like to keep money in the bank, they want it to work for them in other ways.

[Shocked farang]

On 11/4/2018 at 2:00 PM, simoh1490 said:

You have misunderstood....the DPA has insured bank accounts at a very high level for a very long time, they have tried unsuccessfully to lower those limits on many occasions over the years but have always been persuaded to leave them at the higher level. So this is not about the banking system being shaky, it's an attempt, again, to normalise the levels.

 

As for what you wrote about the government seizing bank assets, a nice lay down in a cool space may help your thought processes normalise!

Sorry to say this but the present government keeps on changing the rules everyday for everything, just keep in mind that they were never elected for the mandate, sorry to disturb you but you're dealing with a dictatorship. 

[simoh1490]

1 hour ago, Shocked farang said:

Sorry to say this but the present government keeps on changing the rules everyday for everything, just keep in mind that they were never elected for the mandate, sorry to disturb you but you're dealing with a dictatorship. 

You don't have a clue, not one.

[James Roderick]

So given  bankers are scoundrels likely to take my money during the next financial crisis, what options are there - other than banks - for holding my hard- earned money ??

[topt]

On 11/6/2018 at 4:58 PM, James Roderick said:

So given  bankers are scoundrels likely to take my money during the next financial crisis, what options are there - other than banks - for holding my hard- earned money ??

It does not matter where you keep it there is always risk from something or another. Up to you to decide which you feel is the least likely risk. Just holding cash can be a risk as it can be devalued by inflation.

 

As @simoh1490 has tried to put across that as long as you stay within the insured deposit figure of relevant financial institutions in Thailand you should not have an issue and theoretically it is safer then a lot of other places.

[GalaxyMan]

I don't find anything about Thai banks closing and the depositors losing their money. I did find this, which I find very interesting. The Thai baht took a serious hit and devaluation but the relevant agencies did what they needed to do to mitigate the issue.

 

 

 

From 1985 to 1996, Thailand's economy grew at an average of over 9% per year, the highest economic growth rate of any country at the time. Inflation was kept reasonably low within a range of 3.4–5.7%. The baht was pegged at 25 to the U.S. dollar.

 

On 14 May and 15 May 1997, the Thai baht was hit by massive speculative attacks. On 30 June 1997, Prime Minister Chavalit Yongchaiyudh said that he would not devalue the baht. However, Thailand lacked the foreign reserves to support the USD–Baht currency peg, and the Thai government was eventually forced to float the Baht, on 2 July 1997, allowing the value of the Baht to be set by the currency market. This caused a chain reaction of events, eventually culminating into a region-wide crisis.

 

Thailand's booming economy came to a halt amid massive layoffs in finance, real estate, and construction that resulted in huge numbers of workers returning to their villages in the countryside and 600,000 foreign workers being sent back to their home countries. The baht devalued swiftly and lost more than half of its value. The baht reached its lowest point of 56 units to the U.S. dollar in January 1998. The Thai stock market dropped 75%. Finance One, the largest Thai finance company until then, collapsed.

 

On 11 August 1997, the IMF unveiled a rescue package for Thailand with more than $17 billion, subject to conditions such as passing laws relating to bankruptcy (reorganizing and restructuring) procedures and establishing strong regulation frameworks for banks and other financial institutions. The IMF approved on 20 August 1997, another bailout package of $2.9 billion.

 

By 2001, Thailand's economy had recovered. The increasing tax revenues allowed the country to balance its budget and repay its debts to the IMF in 2003, four years ahead of schedule. The Thai baht continued to appreciate to 29 Baht to the U.S. dollar in October 2010.