Government Guarantee on Bank Deposits

[simoh1490]

4 minutes ago, GalaxyMan said:

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.

Yes, it was known as the Asian crisis or the crash of '97. 

 

What that extract does not tell you is that the central bank of Thailand, BOT,  had all its foreign currency reserves tied up in long-dated instruments,which means that even though it had some funds available to defend the Baht it was unable to get its hands on the money.

[GalaxyMan]

On 11/8/2018 at 5:40 PM, simoh1490 said:

Yes, it was known as the Asian crisis or the crash of '97. 

 

What that extract does not tell you is that the central bank of Thailand, BOT,  had all its foreign currency reserves tied up in long-dated instruments,which means that even though it had some funds available to defend the Baht it was unable to get its hands on the money.

I'm more concerned about a bank failing and then losing any funds in excess of whatever the insured amount is going to be. It doesn't seem to be a likely scenario from what I've been able to discover. The top banks in Thailand are in compliance with all international standards.

[scottiejohn]

On 11/2/2018 at 9:11 AM, giddyup said:

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.

If the bank fails anywhere near your 3 month seasoning extension period you are up the creek if they cannot compensate you in time!

Start again if you have the funds or goodbye to Thailand when your extension expires.

 

In the UK the FCS limit is £85000 and paid (normally) within 7 days

Edited November 10, 2018 by scottiejohn

[simoh1490]

13 minutes ago, scottiejohn said:

If the bank fails anywhere near your 3 month seasoning extension period you are up the creek if they cannot compensate you in time!

Start again if you have the funds or goodbye to Thailand when your extension expires.

 

In the UK the FCS limit is £85000 and paid (normally) within 7 days

"If the bank fails", what about if the world comes to an end! Come on guy, get real, a bank failure during the seasoning period for the 800k is so remote as to be nigh on impossible.

[scottiejohn]

8 minutes ago, simoh1490 said:

"If the bank fails", what about if the world comes to an end! Come on guy, get real, a bank failure during the seasoning period for the 800k is so remote as to be nigh on impossible.

"so remote as to be nigh on impossible."

The world did not end during any previous banking collapse, so get real and look at the real world (especially the Thai bit) we live in.

 

RBS & Northern Rock collapse in the UK.  Alastair Darling had to decide immediately whether to let them slide and protect the rest or defend the whole UK banking system.  The two banks survived but only after massive UK Government bailouts.

We are talking Thailand here where a "glitch in the system" could see a smaller bank "fail/falter" and put customers in limbo for some time before compensation kicks in.  Not 7 days as in the UK.  The just wait and see some comments by Thai IO as to why you are 7 days out with the rules  and so no extension - goodbye not in accordance with the rules.

Edited November 10, 2018 by scottiejohn

[simoh1490]

25 minutes ago, scottiejohn said:

"so remote as to be nigh on impossible."

The world did not end during any previous banking collapse, so get real and look at the real world (especially the Thai bit) we live in.

 

RBS & Northern Rock collapse in the UK.  Alastair Darling had to decide immediately whether to let them slide and protect the rest or defend the whole UK banking system.  The two banks survived but only after massive UK Government bailouts.

We are talking Thailand here where a "glitch in the system" could see a smaller bank "fail/falter" and put customers in limbo for some time before compensation kicks in.  Not 7 days as in the UK.  The just wait and see some comments by Thai IO as to why you are 7 days out with the rules  and so no extension - goodbye not in accordance with the rules.

Even in those extreme examples, set in another country (!), the banks didn't fail, end of story!

[topt]

3 hours ago, scottiejohn said:

could see a smaller bank "fail/falter"

If you are that concerned put it in one of the bigger banks. Not rocket science. 

I am with @simoh1490 on this. 

 

 

[morrobay]

On 11/2/2018 at 8:54 AM, TallGuyJohninBKK said:

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:

 

 

 

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.

 

So the insurance does not cover fraud / theft by inside employees of a bank, or by someone outside of bank ? Because it would seem a bank employee would have more ability at theft. I would be more worried about inside theft than bank failure. I asked a desk lady at Bangkok bank about inside theft and she said they have safeguards for inside theft and that the 1000000 covers all cases? 

Edited November 10, 2018 by morrobay
add

[simoh1490]

4 minutes ago, morrobay said:

So the insurance does not cover fraud / theft by inside employees of a bank, or by someone outside of bank ? Because it would seem a bank employee would have more ability at theft. 

I don't expect that any bank deposit insurance scheme anywhere covers the account holder for fraud/theft by inside staff since that would be a civil/criminal matter rather than a bank failure, a matter that is capable of being remedied via the police and the courts.

 

As has been said repeatedly in this topic there is no evidence whatsoever to suggest that account holder money is at higher risk from employee fraud/theft in Thailand than it is anywhere in the West. There is, however some anecdotal evidence and prejudice by the truck load which allows some posters to reinforce their mantra that US bank accounts are far safer than Thai bank accounts, this despite the fact that US banks fail at the rate of one a week over the past forty years whilst zero Thai banks have failed during the same period!

[TallGuyJohninBKK]

19 hours ago, morrobay said:

So the insurance does not cover fraud / theft by inside employees of a bank, or by someone outside of bank ? Because it would seem a bank employee would have more ability at theft. I would be more worried about inside theft than bank failure. I asked a desk lady at Bangkok bank about inside theft and she said they have safeguards for inside theft and that the 1000000 covers all cases? 

 

Thai Thai government insurance deposits scheme has nothing to do whatsoever with any potential theft / fraud that might occur by bank employees or anyone else.

 

There are myriad of news reports here over the years of Thai bank employees, bank managers and people related to them stealing money out of customers accounts. And how and whether those customers ultimately get reimbursed for their losses is often left unclear / unreported.

 

[KittenKong]

On 11/10/2018 at 7:06 PM, GalaxyMan said:

I'm more concerned about a bank failing and then losing any funds in excess of whatever the insured amount is going to be. It doesn't seem to be a likely scenario from what I've been able to discover. The top banks in Thailand are in compliance with all international standards.

Some big Thai banks seem to have quite a lot of overvalued property on their books, some of which dates right back to the prawn soup crisis of the last century. They seem to be very unwilling to write the asset values down to a sensible level, which probably explains why the properties are still unsold and abandoned after so long.

Also Thailand has massive personal domestic debt (around 70%), and I dont think that much of that is secured in any sensible way.

 

Of course, Thailand is not the only country in which smoke and mirrors represent a large part of the economy.

[simoh1490]

7 hours ago, TallGuyJohninBKK said:

 

 

 

There are myriad of news reports here over the years of Thai bank employees, bank managers and people related to them stealing money out of customers accounts. And how and whether those customers ultimately get reimbursed for their losses is often left unclear / unreported.

 

1

So much unreported and unknown crime in Thailand the West everywhere, you just don't know who to trust any more! Of course it's far easier to estimate it here in Thailand because it fits in so neatly with everyone's perception of the people and the way the country is as a whole....Thailand, money, fraud, stealing, don't trust, run away, hide! The West, money, banking, FDIC, FBI, church on Sundays, apple pie Mary Lou in pigtails on her way to Sunday School and hearts of goodness and light.

[JimGant]

On 11/2/2018 at 12:27 PM, CMBob said:

 

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.

It's kind of a Catch 22, in that too low a coverage sets the banks up for 'runs' by those depositors with more on deposit than what insurance covers (thus, in crisis, the gov't has to quickly up the coverage, re the US in 2008, going from 100k to 250k). Maybe this is only a problem for the very few in Thailand -- but a run by more than a hand full could have serious herd effects.

 

But too high a coverage attracts easy money to questionable financial institutions, whereby the fat cats, knowing the high coverage protects their deposits, will gladly deposit money in risky banks advertising way above market rates of return. Hey, no risk to me if the bank fails..... say these fat cats.

 

That's why, when the US made the 250k coverage permanent -- as it was supposed to be only temporary -- there were some loud groans. And not just because of the above -- remember, banks have to pay the premiums, which, of course, are higher for higher coverage. So, you know the Thai Bankers Association (or whatever it's called) are happy with low (too low) coverage and related premiums.

 

Anyway, good article here:

https://www.brookings.edu/opinions/100000-is-plenty-for-deposit-insurance/