Thai bank deposit guarantee

[mngmn]

The new requirements for bank deposits of 800k for five/six months and 400k all year round for a retirement visa have been discussed at length.

 

I discovered today that the Thai governments bank deposit guarantee is dropping to 1 million (from the current 15 million) in 2020.

 

This would make it prudent to ensure that none of your bank accounts in Thailand have a balance over 1 million baht.

 

Will be interesting to see if the retirement requirements are increased to over 1 million in 2020.

[david555]

[KittenKong]

17 minutes ago, mngmn said:

I discovered today that the Thai governments bank deposit guarantee is dropping to 1 million (from the current 15 million) in 2020.

They keep moving the goalposts on this.

[sanmyintmaung]

 

35 minutes ago, mngmn said:

I discovered today that the Thai governments bank deposit guarantee is dropping to 1 million (from the current 15 million) in 2020.

Since the bank deposit guarantee will become 1 million Baht per depositor per financial institution in 2020, depositors should distribute their deposits among different banks to manage risk under the Deposit Protection Institution.

[david555]

18 minutes ago, sanmyintmaung said:

 

Since the bank deposit guarantee will become 1 million Baht per depositor per financial institution in 2020, depositors should distribute their deposits among different banks to manage risk under the Deposit Protection Institution.

Yes , but better  checking the fine print of the rules , as it could be by (1)account or by (1) bank only maybe , better check good , as they do that probably with a purpose coming from so high 15 mill. to only 1 million baht on 4 years ….

[OJAS]

The cynic in me is seriously wondering whether the Data Protection Agency have made this reprehensible move in response to a number of well-stuffed brown envelopes which they have received from the Thai Bankers' Association - who are presumably primarily motivated by the need to ensure that their members are put to minimal expense in keeping their security procedures up to date so as to minimise fraud.

 

As far as retirement extensions are concerned, it seems to me the 65k monthly income method (which, of course, could also be increased in future) might prove the only way forward of avoiding unnecessary exposure to risk for those who, like myself, would prefer not to have to spread our resources among a multiplicity of bank accounts (which could, in practice, well prove easier said than done to open in any event).

[mokwit]

The official position on this is: Hab guarantee, chuua!

[Puchaiyank]

Presently have a Bangkok Bank account.  Thinking of opening a TMB account also...is this a good move or not?

[griffon2011]

If the Thai banks have bail-in laws similar to Australian, New Zealand, US and possibly European banks then deposit insurance is a moot point because bail-ins are designed to be implemented prior to the bank failing.  When you deposit money with the bank you are essentially making a loan and become an unsecured creditor.  If the bank has some type of crisis they use depositor money to try and save the bank. You are issued stock in exchange for "your" money.   However, if they fail the money is lost so whats left to cover by deposit insurance? Nothing, you are now a shareholder. Cypress in 2012 was the initial test case. Insurance covered some of the deposits but many lost the majority of money held by the banks.  The banks learned and fine tuned the laws. 

 

Also, prior to my knowledge of the above, when I was opening a new 800K fixed deposit account I mentioned the diminishing deposit insurance to the banker and indicated that maybe he knew something I should know about the Thai banking system.  I said "What is it dropping to next year, about 1 million?" to which he replied "Maybe less" at which point I think he realized  he probably should not have said that and would not discuss it further.  Makes you wonder.  

[Pravda]

Do you seriously think deposit insurance in Thailand is worth anything.

 

Even better question is do you really think Farang money would be insured? 

 

And the bestest question. I am sure you will eventually get your money back, but if any big Thai bank fails your Thai baht will be worth the equivalent of Bear Stearns share price.

 

 

[ubonjoe]

Not directly visa related moved to here.

[mokwit]

9 minutes ago, griffon2011 said:

If the Thai banks have bail-in laws similar to Australian, New Zealand, US and possibly European banks then deposit insurance is a moot point because bail-ins are designed to be implemented prior to the bank failing.  When you deposit money with the bank you are essentially making a loan and become an unsecured creditor.  If the bank has some type of crisis they use depositor money to try and save the bank. You are issued stock in exchange for "your" money.   However, if they fail the money is lost so whats left to cover by deposit insurance? Nothing, you are now a shareholder. Cypress in 2012 was the initial test case. Insurance covered some of the deposits but many lost the majority of money held by the banks.  The banks learned and fine tuned the laws. 

 

Also, prior to my knowledge of the above, when I was opening a new 800K fixed deposit account I mentioned the diminishing deposit insurance to the banker and indicated that maybe he knew something I should know about the Thai banking system.  I said "What is it dropping to next year, about 1 million?" to which he replied "Maybe less" at which point I think he realized  he probably should not have said that and would not discuss it further.  Makes you wonder.  

People with money in Finance companies in 1997 were eventually made whole on their principal after years without interest payments.

[marcusarelus]

21 minutes ago, Pravda said:

Do you seriously think deposit insurance in Thailand is worth anything.

 

Even better question is do you really think Farang money would be insured? 

 

And the bestest question. I am sure you will eventually get your money back, but if any big Thai bank fails your Thai baht will be worth the equivalent of Bear Stearns share price.

 

 

Ya.  No real need for it as all of the bank failures in the past few years have been in the West and not in Thailand.  Maybe you can name the last bank in Thailand that failed?

[mokwit]

13 minutes ago, marcusarelus said:

Ya.  No real need for it as all of the bank failures in the past few years have been in the West and not in Thailand.  Maybe you can name the last bank in Thailand that failed?

I could probably tell you the name of the next one to fail. A while back, but failed Thai banks included Thai Danu Bank, Bangkok Metropolitan Bank, Laemthong Bank, Union Bank of Bangkok, others.

[marcusarelus]

1 hour ago, mokwit said:

I could probably tell you the name of the next one to fail. A while back, but failed Thai banks included Thai Danu Bank, Bangkok Metropolitan Bank, Laemthong Bank, Union Bank of Bangkok, others.

Perhaps I should have said after the Asian Financial crisis in 1997 which was like the great depression in the West. 

[Pravda]

56 minutes ago, marcusarelus said:

Perhaps I should have said after the Asian Financial crisis in 1997 which was like the great depression in the West. 

 

Nobody knows and can predict the future. All I'm saying the insurance will not be worth the paper its written on if there is a (major) bank failure.

[scubascuba3]

Do you seriously think deposit insurance in Thailand is worth anything.
 
Even better question is do you really think Farang money would be insured? 
 
And the bestest question. I am sure you will eventually get your money back, but if any big Thai bank fails your Thai baht will be worth the equivalent of Bear Stearns share price.
 
 

Post #2 image is in English so i imagine the protection is for farang also.

Its possible if multiple banks nose dived at the same time, like the black money crisis some talk about, then it may be difficult to bail out multiple banks, other countries would have the same problem

[OJAS]

17 hours ago, Pravda said:

 

Nobody knows and can predict the future. All I'm saying the insurance will not be worth the paper its written on if there is a (major) bank failure.

So too much to hope for some statutory compensation scheme to exist here in LOS as exists in the UK, for example:-

 

https://en.wikipedia.org/wiki/Financial_Services_Compensation_Scheme

 

https://www.fscs.org.uk/what-we-cover/banks-building-societies/

 

(For the sake of comparison, the £85,000 maximum limit covered by the UK scheme = just under 3.5m THB)

[topt]

There is an awful lot of scaremongering in these posts.

 

They backtracked on the level of reductions to the deposit protection scheme before and who knows if they may do it again.

 

I also doubt that a "normal" branch manager at a bank is going to have any insight to what the level may or may not be in 17 months time.

 

2 hours ago, OJAS said:

So too much to hope for some statutory compensation scheme to exist here in LOS as exists in the UK, for example:-

As far as I am aware that is exactly what the DPA scheme is. Have a read if you have not looked at it before. 

http://www.dpa.or.th/en/site/index

[griffon2011]

2 hours ago, OJAS said:

So too much to hope for some statutory compensation scheme to exist here in LOS as exists in the UK, for example:-

 

https://en.wikipedia.org/wiki/Financial_Services_Compensation_Scheme

 

https://www.fscs.org.uk/what-we-cover/banks-building-societies/

 

(For the sake of comparison, the £85,000 maximum limit covered by the UK scheme = just under 3.5m THB)

I believe that money in any financial institution such as a bank, mutual fund or brokerage is at risk in the event of another global financial crisis. The people responsible for the last crisis have been busy devising a means to protect themselves at our expense.  In Dec 2012 The FDIC(US) and Bank of England created a bail-in policy titled "Resolving Globally Active, Systemically Important Financial Institutions".  This essentially orders the banks to recapitalize by confiscating the funds of their creditors (you are an unsecured creditor) by turning debt into equity.  You will be issued shares in the bank instead of your money.  In addition to that, bank derivative claims have Super Priority Status over all other claims.  In the unlikely event that there is any money left it will be distributed in a manner directed for example in the US by the Dodd Frank Act and I can assure you that you as an unsecured creditor are far down on the list!  The last time I checked into the viability of the FDIC (deposit insurance in the US) they had 25 billion to cover 9 trillion in deposits and legislation is in place to prevent the government from printing money to help if the FDIC ran short.  Deposit insurance is used after the bank fails while a bail-in is implemented before the bank fails and you are issued stock so you are now a part owner of the bank and not a depositor.  The FDIC who main purpose was to protect our deposits is now directing the banks to confiscate our money to protect the banks who have gambled and lost.  

[mike787]

On 3/30/2019 at 1:49 PM, KittenKong said:

They keep moving the goalposts on this.

move posts in Thais favor...Of course. NO surprise!  Welcome to LOS.  Feel the love!

[mike787]

Unfortunate!

[mike787]

20 hours ago, scubascuba3 said:

Do you seriously think deposit insurance in Thailand is worth anything.

....agreed, what does it really matter...its only a number if there is no integrity to enforce the policy...we have nothing.  Much like everything here, don't bring/invest anything you are NOT prepared to loss or give away to Thais. 

[scubascuba3]

....agreed, what does it really matter...its only a number if there is no integrity to enforce the policy...we have nothing.  Much like everything here, don't bring/invest anything you are NOT prepared to loss or give away to Thais. 

not my quote, don't know how you managed to do that

[OJAS]

22 hours ago, topt said:

As far as I am aware that is exactly what the DPA scheme is. Have a read if you have not looked at it before. 

http://www.dpa.or.th/en/site/index

Thanks for the link. Looks like the DPA are, indeed, the Thai equivalent of the British FSCS. Clearly I was having a senior moment when referring to them as the Data Protection Agency in post #6! ????

[topt]

On 3/31/2019 at 3:43 PM, griffon2011 said:

In Dec 2012 The FDIC(US) and Bank of England created a bail-in policy titled "Resolving Globally Active, Systemically Important Financial Institutions".  This essentially orders the banks to recapitalize by confiscating the funds of their creditors (you are an unsecured creditor) by turning debt into equity.  You will be issued shares in the bank instead of your money.

I think this is more scaremongering. This was a white paper and not clear if the necessary legislation has been passed in the UK.

However I also do not see that this includes depositors money which falls under the current UK protection scheme mentioned earlier. If it did what is the point of the guarantee. Happy to agree with you if you can show me a verifiable source that says it includes Joe Bloggs savings up to the guaranteed amount.......... 

https://corpgov.law.harvard.edu/2013/01/09/fdic-and-bank-of-england-release-white-paper/

 

I do not disagree that in the event of a catastrophic financial crisis all bets may be off but I choose not to go down that path of consideration.  

[Briggsy]

On 3/30/2019 at 3:24 PM, mokwit said:

People with money in Finance companies in 1997 were eventually made whole on their principal after years without interest payments.

Not criticising but is this phrase in general usage or is it usually restricted to the criminal world? (fully compensated)

[Briggsy]

On 3/31/2019 at 3:21 PM, topt said:

I also doubt that a "normal" branch manager at a bank is going to have any insight to what the level may or may not be in 17 months time.

Why is normal in quotation marks? Are you suggesting the majority of Thai bank branch managers are weird in some way? Thus weird means "normal" in that sector of the employment market?

[topt]

6 minutes ago, Briggsy said:

Why is normal in quotation marks? Are you suggesting the majority of Thai bank branch managers are weird in some way? Thus weird means "normal" in that sector of the employment market?

I will take it as a serious question rather than an attempted wind up.

Normal was meant as in a branch manager with no extra status in the hierarchy compared to perhaps a more senior bank person who happened to be in the branch that day Eg. some sort of regional branch director or similar who may access to more information.

[griffon2011]

1 hour ago, topt said:

I think this is more scaremongering. This was a white paper and not clear if the necessary legislation has been passed in the UK.

However I also do not see that this includes depositors money which falls under the current UK protection scheme mentioned earlier. If it did what is the point of the guarantee. Happy to agree with you if you can show me a verifiable source that says it includes Joe Bloggs savings up to the guaranteed amount.......... 

https://corpgov.law.harvard.edu/2013/01/09/fdic-and-bank-of-england-release-white-paper/

 

I do not disagree that in the event of a catastrophic financial crisis all bets may be off but I choose not to go down that path of consideration.  

The bail-in laws in the UK are different from the US and you will have to due your own research.  Bail-ins became law in the US around 2014-2015 and the Dodd Frank Act among others defines their use or rather abuse of the depositors.  I'm not trying to prove a point here and was only interested to know if Thai banks have bail-in laws.  I did my own research a few years ago and determined that the risk vs reward was too great at my age and slowly emptied my Vanguard fund accounts and keep a minimal amount in my bank account.