Latest debt relief will cost banks Bt10bn per year: research

[rooster59]

Latest debt relief will cost banks Bt10bn per year: research

By The Nation

 

 

The central bank’s latest debt-relief measure will cost banks Bt10 billion a year, Kasikorn Research Centre said on Friday.

 

 

On Thursday, the Bank of Thailand announced a debt consolidation measure to allow borrowers to bundle their credit card, personal and mortgage loans into one sum. Borrowers can then utilise collateral in their mortgage loans to restructure their debt total with financial institutions. This will cut their interest on personal loans from the usual 16-25 per cent to the minimum retail rate (MRR) of 5.75 to 8.8 per cent, said the central bank. Borrowers will be also allowed to extend their debt payment period.

 

“The debt relief will greatly benefit retail borrowers, but is expected to reduce banks’ income from interest by 1.67 per cent annually,” said Thanyalak Vacharachaisurapol, deputy managing director at Kasikorn Research.

 

For the rest of this year, bank revenue from interest payments is expected to drop by 0.56 per cent, she added.

 

Annual revenue from loan interest in the banking sector totals around Bt700 billion.

 

Thanyalak said banks will get some benefit from the debt consolidation as it may enable them to reduce their reserves-against-risk assets.

Meanwhile, Kittipat Chonwut, CEO of personal loans company J Fintech, said he supports the central bank’s measure and will advise J Fintech borrowers to refinance their debts with banks. But banks would first have to accept their requests, he cautioned. 

 

J Fintech has loaned money to about 8,000 people affected by the Covid-19 fallout. The company also joined a previous central bank scheme designed to help borrowers restructure their debts. Kittipat said only 100-200 J Fintech borrowers were asking for more support and their combined debt was not large.

 

Source: https://www.nationthailand.com/business/30393690

 

-- © Copyright The Nation Thailand 2020-08-29

 

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[Matzzon]

4 minutes ago, rooster59 said:

The central bank’s latest debt-relief measure will cost banks Bt10 billion a year, Kasikorn Research Centre said on Friday.

That will make them really happy. I wonder what kind of half criminal or hidden extra fees they will come up with to cover that loss.

[robblok]

30 minutes ago, Matzzon said:

That will make them really happy. I wonder what kind of half criminal or hidden extra fees they will come up with to cover that loss.

Not sure why you think banks should take the hit. People who loan get into agreement and now they are going to pay less. Your moaning about it if banks try to get some money back. Stupid IMHO as banks were forced to do this so why not make some extra money to cover costs. 

 

If someone forces me to charge my clients less ill find ways to make up for it too. Its a normal way of doing business when one is forced by a third party into something bad.

 

There was a deal between two parties, then a third party changes that deal and you expect them to take the hit. 

[Matzzon]

16 minutes ago, robblok said:

Not sure why you think banks should take the hit.

When did I say that? The only thing I did, was to find out what the action would lead to.

Edited August 29, 2020 by Matzzon

[blackcab]

The real problem is that some borrowers will consolidate their debts and then immediately apply for more short term loans or run up their credit card balances again. It will be almost irresistible to some people.

 

I sincerely hope that is the minority of people though.

[2 is 1]

So sick interest % 16-25! Its almost like bank's are loan sharks! Many coundry have limit what can take interest.

When i had mortgage in Finland i pay only 1,5 % to bank + euribor interest. My credit cards = Diners 5%, Visa 6%, Amex 7%. Annual %!

Edited August 29, 2020 by 2 is 1

[dabhand]

4 hours ago, 2 is 1 said:

So sick interest % 16-25! Its almost like bank's are loan sharks! Many coundry have limit what can take interest.

When i had mortgage in Finland i pay only 1,5 % to bank + euribor interest. My credit cards = Diners 5%, Visa 6%, Amex 7%. Annual %!

Same as many UK credit cards. Even the main banks (e.g. Lloyds / Halifax) are charging rates of up to 30% on CC debt and are refusing to lower their rates. At the same time they are reducing their deposit rates to close to 0%. Can expect it of the CC's that only take on high risk customers but the main banks tend to weed these out before making an offer and then gradually increase their rates to usurious levels. They justify the increase by pointing to previous BOE rate increases, but no sign of reducing when these rates are lowered.

 

Yes, they can point to higher risk levels due to Covid-19, but this has been happening well before the current times. The so called 'payment holidays' offered by these banks is merely postponing the payment cycle as interest still racks up during this 'holiday' period. Lowering rates would make much more of a difference but, of course, the banks are not into helping the customers. Bottom line impact, old chap. Bonuses, what, what!!

 

Well done to the Thais for taking measures that are aimed at assisting the ordinary folk. Yes, as Blackcab noted, there is a danger that borrowings will increase on the back of it. But hopefully BOT will insist that the banks manage that situation in a positive way.

[hotchilli]

8 hours ago, rooster59 said:

his will cut their interest on personal loans from the usual 16-25 per cent

Which was an almost criminal amount of interest, they say don't borrow from loan sharks... at least they only charge 20%

[Cake Monster]

8 hours ago, blackcab said:

The real problem is that some borrowers will consolidate their debts and then immediately apply for more short term loans or run up their credit card balances again. It will be almost irresistible to some people.

 

I sincerely hope that is the minority of people though.

I personally think that the people who apply for more short term loans or try to get higher limits on their Credit Cards will be refused.

The Banks have a very serious problem in potential NPL, and I really dont think they will openly invite even more.

[digger70]

10 hours ago, rooster59 said:

Latest debt relief will cost banks Bt10bn per year: research

Here we go ,Up goes the Fees /extra costs for anything to do with banking

[dabhand]

3 hours ago, hotchilli said:

Which was an almost criminal amount of interest, they say don't borrow from loan sharks... at least they only charge 20%

That's 20% per month for the usual loan sharks round my way.......

[Leaver]

16 hours ago, rooster59 said:

Thanyalak said banks will get some benefit from the debt consolidation as it may enable them to reduce their reserves-against-risk assets.

Just about everything here is a risk asset now.