Tipping point: Banks recalling loans pose long-term threat to Phuket’s tourism recovery

[rooster59]

Tipping point: Banks recalling loans pose long-term threat to Phuket’s tourism recovery

By Tanyaluk Sakoot

 

Chains lock the doors to a restaurant in Kata. Photo: Tanyaluk Sakoot

 

Bhuritt Maswongssa, who serves as the Southern Thailand representative on the Tourism Council of Thailand (TCT), has called for government intervention on banks now calling in business loan repayments, warning that lack of action will send many hotels and other tourism-related businesses into bankruptcy and cause damage that will take the tourism industry years to recover from.

 

“Today, nearly all hotels on the island have bank loans. There are only a few hotels that do not have loans with the banks. This leaves many businesses on the island exposed to critical risk from not being able to make loan repayments during the current economic situation,” said Mr Bhurritt, who also owns and operates the Patong Resort Hotel as the General Manager.

 

“Some hotels may still be able to re-negotiate their loans or restructure them if they still have assets that they can use as collateral, but many hotels have been closed for a long time without any form of revenue, so it makes no sense for banks to be foreclosing on unpaid loans and seizing a property that will not make any money,” he added.

 

Full story: https://www.thephuketnews.com/tipping-point-banks-recalling-loans-pose-long-term-threat-to-phuket-tourism-recovery-76915.php

 

-- © Copyright Phuket News 2020-08-08
 
- Whatever you're going through, the Samaritans are here for you
- Follow Thaivisa on LINE for breaking COVID-19 updates

 

 

[american2]

If the Government decides to call a moratorium on loans it should be across the board.  Available for all loans  as all people have suffered through this pandemic.  Otherwise call in the loans and let the Country, Banks, Business and Popuation reset.  The banks need to call in Debt or the economy will be a farce.

Edited August 8, 2020 by american2
misspelling

[Cake Monster]

Banks have an obligation to their Share Holders, and to their Customers to reign in any Debts that are owed to them.

Much of the problem, probably lies in the fact that these Business,s have been, and are now, poorly Managed.

They will probably have been running on  massive overdrafts even in the good times, with no contingency plans for any downturn in  trade. Now that there is no Collateral left to borrow against, they are in the doo-doo.

The  Banks will already have given these Business,s opportunity to restructure their Loans and Debt " holidays ", and now time has run out on their Loans.

The most prudent thing to do, would to let these Business,s slide out of the Market place, leaving fewer, but stronger, well Managed Business,s to take the Market Place, which will be stronger and better placed to deal with the future.

[digger70]

6 hours ago, rooster59 said:

Tipping point: Banks recalling loans pose long-term threat to Phuket’s tourism recovery

I like to see that the banks do that .

If they do Recall All loans The banks will be in trouble themselves, There's no hope in Hell that the Borrowers can pay if they don't have the Money/Jobs/ Tourists business to meet the payments.

What are the banks going to do if they Foreclose? They will have Thousands off Properties on the books that they can't sell. The banks will also Go Broke.

 

[Cake Monster]

8 minutes ago, digger70 said:

I like to see that the banks do that .

If they do Recall All loans The banks will be in trouble themselves, There's no hope in Hell that the Borrowers can pay if they don't have the Money/Jobs/ Tourists business to meet the payments.

What are the banks going to do if they Foreclose? They will have Thousands off Properties on the books that they can't sell. The banks will also Go Broke.

 

Yes ! They will go broke, and that is the major concern of them all right now.

There is too much Household Debt in Thailand ( 80 % of GDP ), and it is now starting to ping big time on the Radar Screens.

OK, other Countries have Household Debt running higher than 80% of GDP, but those Countries have the people with the ability to repay those debts. The worry is, that Thailand does not have the people to repay their debts, and it will all become delinquent very quickly.

I really hope that the debts can be repaid, or things will get very, very Ugly. 

[Sharp]

3 minutes ago, digger70 said:

I like to see that the banks do that .

If they do Recall All loans The banks will be in trouble themselves, There's no hope in Hell that the Borrowers can pay if they don't have the Money/Jobs/ Tourists business to meet the payments.

What are the banks going to do if they Foreclose? They will have Thousands off Properties on the books that they can't sell. The banks will also Go Broke.

 

Got to agree...Foreclosure is for the most part is the 'last' resort with a low return for the banks at the best of times can you imagine how many properties will be vacant and on the market should they drop the hammer now surely it would be more prudent to go the extra mile to assist the debtor knowing they will try their utmost to restructure and make a go of it rather than lose it all.  

[KarenBravo]

3 minutes ago, Cake Monster said:

Yes ! They will go broke, and that is the major concern of them all right now.

There is too much Household Debt in Thailand ( 80 % of GDP ), and it is now starting to ping big time on the Radar Screens.

OK, other Countries have Household Debt running higher than 80% of GDP, but those Countries have the people with the ability to repay those debts. The worry is, that Thailand does not have the people to repay their debts, and it will all become delinquent very quickly.

I really hope that the debts can be repaid, or things will get very, very Ugly. 

A classic case of greed taking priority over sensible risk management.

[digger70]

7 minutes ago, Sharp said:

Got to agree...Foreclosure is for the most part is the 'last' resort with a low return for the banks at the best of times can you imagine how many properties will be vacant and on the market should they drop the hammer now surely it would be more prudent to go the extra mile to assist the debtor knowing they will try their utmost to restructure and make a go of it rather than lose it all.  

But it will be a big burden on the Banks even than.

[Cake Monster]

7 minutes ago, Sharp said:

Got to agree...Foreclosure is for the most part is the 'last' resort with a low return for the banks at the best of times can you imagine how many properties will be vacant and on the market should they drop the hammer now surely it would be more prudent to go the extra mile to assist the debtor knowing they will try their utmost to restructure and make a go of it rather than lose it all.  

Whilst I agree with your Post in the main, the Banks cannot restructure all of their outstanding Loans.

They are simply unable to do this due to Capitalization, and to do so would allow for a much higher delinquency rate, with even bigger losses further down the line.

The onus really is upon the borrower to repay their Debts, money they eagerly took from the Bank because nothing could go wrong with their Business Etc. 

If a Business defaults upon a Loan, there is very little chance that they will be able to repay that Loan going forward

[Sharp]

4 minutes ago, digger70 said:

But it will be a big burden on the Banks even than.

Cant disagree with you ! Some serious risk assessments being throught thro now i would imagine ....

[Sharp]

2 minutes ago, Cake Monster said:

Whilst I agree with your Post in the main, the Banks cannot restructure all of their outstanding Loans.

They are simply unable to do this due to Capitalization, and to do so would allow for a much higher delinquency rate, with even bigger losses further down the line.

The onus really is upon the borrower to repay their Debts, money they eagerly took from the Bank because nothing could go wrong with their Business Etc. 

If a Business defaults upon a Loan, there is very little chance that they will be able to repay that Loan going forward

Agreed ! Consolidation Loan, Another loan or a bigger loan, longer term loan  ALL look a bad bet i suppose given the enviroment..Dammed if you do Dammed if you dont!! 

Edited August 8, 2020 by Sharp

[sammieuk1]

it makes no sense for banks to be foreclosing on unpaid loans and seizing a property that will not make any money,” he added.

 

Perfectly logical for a Thai bank though he most have forgot what country he was living in????

[johng]

46 minutes ago, sammieuk1 said:

foreclosing on unpaid loans and seizing a property that will not make any money,”

Aren't the banks still sitting on seized (empty) property from the 1997 crash, they keep them on the books so as not to appear as loan defaults (or some such malarkey )

[hotchilli]

2 hours ago, Cake Monster said:

They will probably have been running on  massive overdrafts even in the good times, with no contingency plans for any downturn in  trade. Now that there is no Collateral left to borrow against, they are in the doo-doo.

The  Banks will already have given these Business,s opportunity to restructure their Loans and Debt " holidays ", and now time has run out on their Loans.

The most prudent thing to do, would to let these Business,s slide out of the Market place, leaving fewer, but stronger, well Managed Business,s to take the Market Place, which will be stronger and better placed to deal with the future.

Makes a lot of sense, many smaller less financially stable businesses have been sailing close to the wind for a along time, these need to be weeded out leaving the financially sound businesses remaining for the fewer customers that are using them now.
Too many are borrowing money to remain but have no way of repayment and no future prospect.

[RichardColeman]

Funny thing to me is that Thailand government wants to beg for Chinese tourists coming back after destroying iits economy, making its people unemployed, homeless and destitute ! 

[izod10]

1 hour ago, Sharp said:

Cant disagree with you ! Some serious risk assessments being throught thro now i would imagine ....

Not just the hotels etc, but the banks themselves,they will undoubtedly go tits up too,was one bank in serious trouble before covid.

 Id keep as little money in a Thai bank as i could now,it makes Cyprus look like small beer in comparison

[ChipButty]

Some people I know have cars on finance dont have to pay until October this dont look like its getting any better so do the finance companies extend that grace period or what? they dont want to go around repossession cars they cant sell.

Thai are famous for borrowing money one of my wife's friends the other day want to borrow 200,000 Baht, sorry it's not happening no security nothing offer, Maybe they dont speak to me anymore thats fine by me

[Kopitiam]

30 minutes ago, RichardColeman said:

Funny thing to me is that Thailand government wants to beg for Chinese tourists coming back after destroying iits economy, making its people unemployed, homeless and destitute ! 

Please show proof that it's the Chinese tourists who destroyed the Thai economy and made its people unemployed, homeless and destitute.

[robblok]

46 minutes ago, RichardColeman said:

Funny thing to me is that Thailand government wants to beg for Chinese tourists coming back after destroying iits economy, making its people unemployed, homeless and destitute ! 

It stings you a lot that they are not begging you to get back. Realistically they are right Chinese market is good for them. They have seen that. Now it does not matter anymore who you ask everyone has the virus. So to exclude a profitable market is just crazy. Nobody puts feelings before business. 

[robblok]

21 minutes ago, ChipButty said:

Some people I know have cars on finance dont have to pay until October this dont look like its getting any better so do the finance companies extend that grace period or what? they dont want to go around repossession cars they cant sell.

Thai are famous for borrowing money one of my wife's friends the other day want to borrow 200,000 Baht, sorry it's not happening no security nothing offer, Maybe they dont speak to me anymore thats fine by me

Yea i mean why loan money if there is no security. Especially if you dont know them well enough. I loaned 800k to my ex wife for 2 weeks. Unsecured, but i knew what i was getting into. Got the money back. I would not do that with strangers. 

[BritManToo]

3 hours ago, Cake Monster said:

Much of the problem, probably lies in the fact that these Business,s have been, and are now, poorly Managed.

They will probably have been running on  massive overdrafts even in the good times, with no contingency plans for any downturn in  trade.

Can't imagine many business plans included the country being closed for 6-12 months.

Suspect none of them will survive, no matter how well or badly managed.

[BritManToo]

24 minutes ago, Kopitiam said:

Please show proof that it's the Chinese tourists who destroyed the Thai economy and made its people unemployed, homeless and destitute.

They invented and spread COVID around the world, of course they're to blame.

[Sharp]

11 minutes ago, BritManToo said:

Can't imagine many business plans included the country being closed for 6-12 months.

Suspect none of them will survive, no matter how well or badly managed.

Exactly planning for a complete financial meltdown in your sector of business I've yet to see in any business plan ????

[Kopitiam]

45 minutes ago, BritManToo said:

They invented and spread COVID around the world, of course they're to blame.

You sounded like that "orange" man.

[DaftToPutRealName]

2 hours ago, Kopitiam said:

Please show proof that it's the Chinese tourists who destroyed the Thai economy and made its people unemployed, homeless and destitute.

Boy have I got a story to tell you about a little city called Wuhan...

[DaftToPutRealName]

1 hour ago, Kopitiam said:

You sounded like that "orange" man.

The best thing about TDS is that no matter how much you can't believe he had two scoops of ice cream, facts like the Wuhan Shivers being yet another example of China's disgusting habits coming out to bite the rest of the world in the form of a pandemic.

Or is seeing orange for you the same as a bull seeing red?

[DaftToPutRealName]

2 hours ago, robblok said:

Yea i mean why loan money if there is no security. Especially if you dont know them well enough. I loaned 800k to my ex wife for 2 weeks. Unsecured, but i knew what i was getting into. Got the money back. I would not do that with strangers. 

Smart smart smart. Nothing wrong with loaning money out, but just like you wouldn't give a bloke you just met at the bar your credit card, you wouldn't do the same for a people who have a culture that is well known for taking and considering it a "gift" before hiding behind the loss of face and expecting you to do nothing about it.

I lend money out to someone who flips luxury goods - I go to the shop/import it in and buy them up with my capital, then she sells them off on the 2ndary market and pays it back with a bit of a bonus on top. Literally the only person who gets any $$$ out of this daftie.

[Deli]

I am sure the Chinese Government is happy to help out and to buy in for peanuts.

[Kopitiam]

2 hours ago, DaftToPutRealName said:

Boy have I got a story to tell you about a little city called Wuhan...

I too have a story about a "orange" man in White House that caused the death of more than 150,000 people in the US.....

[greeneking]

4 hours ago, Sharp said:

Exactly planning for a complete financial meltdown in your sector of business I've yet to see in any business plan ????

A lot of 'wise' people on here who want to make you feel bad you weren't as all knowing as them.