Approaching Thai Banks to accept DLC's, SBLC's

[Andaman Al]

Hi

 

I have  personal and business accounts with the Bangkok Bank. I want to approach the Bangkok Bank HQ (I will have to go to Bangkok) concerning the business account to accept DLC's and SBLC's. Of course to do this they would need to set me up a non operational credit line activated on the arrival of the authenticated instrument. The letters of credit are for some major commodity contracts I have been given on a plate outside Thailand. Values initially would be around 10M USD up. 

 

Has anyone done this in Thailand or can anyone recommend a lawyer, maybe financially regulated that can assist with negotiating this type of arrangement with my bank. I need to go to the city as the local town where my accounts were set up cannot begin to handle the discussion it is like watching tumbleweed blow across the plains when I discuss it with them. Very happy to engage with someone via PM etc. Thanks.

[fletchsmile]

They're a standard banking product. You shouldn't need a lawyer.

 

Last time I was involved in getting LCs set for a company I was working for, was over 15 years ago. But not a lot has changed. It's still the same old product.

 

The process was slow, and they kept asking for additional information. There was the usual reluctance to take any credit risk involving foreigners when it comes to individual and small companies. So some were just going thru the motions, and in some cases I'm pretty sure they'd no intention of giving us a facility.

 

Few tips of the top of my head:

 

- Biggest suggestion would be to talk to several banks at the same time, not just the one you bank with, and keep pushing several banks at once. This may involve opening new accounts. Then hope one comes up, somewhat like lottery numbers. It's good practice anyway to have relationships with more than one bank anyway. If you're up country this can also speed up things like bank transfers, cheque clearing and cut fees etc.

 

- Try and get a list of documents they want before the visit, and start preparing now. They will still want more though, so no big deal if you don't. But at least you could start preparing

 

- They like to see and discuss your business plans, so be prepared to supply things like cashflow projections, budgets etc which are forward looking, not just historical account info

 

- One carrot you might dangle is staff payroll accounts. If you pay a reasonable number of staff salaries, it can be a good move to have them all open a bank account with your preferred bank and pay the salary into there if you don't already do so. It is then possible to raise this as an item for negotiation. eg if you have 50 employees all getting their salary paid into Bangkok bank that's attractive to the Bank. If you need to go with another bank for your LC facilities you can talk about switching all those accounts to them. Banks find that attractive. Needs a little admin managing with staff though, but you're quite entitled to ask them all to open accounts with say SCB to get salaries paid into and change your main banking relationship. SCB will likely help with the process

 

- If you know any people have friends that work at banks in senior positions then leverage them. We got the best results where we knew someone or had a connection at the bank. I've been on the other side as well, working for banks rather than asking for facilities. I had nothing to do with retail lending, however, if a friend wanted banking arrangements I could use my status and position to help. I often did that with mortgages, and occasionally with commercial loans or ODs etc . Friend asks me and then I make a personal request to the right department to introduce my friend. Status and relationships are very important in Thailand. I no longer work for a bank here though ????

 

- Possibly think about your company structure. It can be useful to have an overseas company of some form, eg Singapore holding company or subsidiary. It was often easier to negotiate LCs from Singapore banks.

 

- When looking at other banks, google around. Check the websites of banks as to which focus on supply chain financing. Look for banks that focus on SMEs. eg TMB used to be very keen on trade finance and supply chain. Their business strategy was to make SMEs a larger segment.

Edited July 6, 2019 by fletchsmile

[Andaman Al]

Fletch

 

I cant thank you enough for your considered and comprehensive reply. Much appreciated. I will start preparing additional paperwork tomorrow (and bulk out the rest ????  ). I will also take a look at TMB thanks for the heads up.