Bank of Thailand Debt Moratorium Scheme Ended

[Banana7]

Today, the Bank of Thailand (BOT) Assistant Governor stated the BOT broad-based debt moratorium ended on Thursday October 15, 2020. She said that the broad based scheme will not be extended. They plan to introduce schemes to help financial institutions to help their debtors. BOT wants the banks to avoid classifying loans as NPLs.

 

BOT has not reported NPLs in 2020 on their website but are reporting "special mention loans" as at August 2020 as 1.2 trillion baht. It seems NPLs are enormous, else they would be reporting the numbers. Sounds like the banks are in worse shape than the public is aware.

 

Best to take your cash out the banks.

 

Edited October 16, 2020 by Banana7

[Brunolem]

Unfortunately this is the same everywhere.

 

Have a look at the European banks, notably Deutsche Bank, BNP Paribas, and the Italian banks...

 

And China!

 

The states, with the help of the central banks, won't let the banks collapse.

 

They can always print enough money to fill up the holes...or transfer the bad debts to a special purpose vehicle, and stuff them to the unaware general public...

Edited October 16, 2020 by Brunolem

[Kwasaki]

Bangkok bank is supposed to be bullet proof. 

How could they take my money.? 

[Golden Triangle]

Serious question directed at those on here who profess to understand these situations,

 

 

Should I be worried ?

 

 

[Cake Monster]

23 minutes ago, Banana7 said:

BOT wants the banks to avoid classifying loans as NPLs.

The very last thing that BOT and the Government want is a huge showing within the Commercial Banking System of NPL.

By  placing default and delinquent Loans into " special mention Loans " which are Loans that are between 30 and 90 Days overdue on repayment, the BOT hopes to keep the Investment confidence high within the Country for Foreign Investors.

The Share prices of the Banks will also stay bouyant due to these measures being taken.

However ! ,  All will go well, as long as the Interest OR the principle on the Loans gets paid by the debtor s in " Special Mention "

But if these debtors default on the agreed payments, they will rapidly convert into NPL Loans, and a projection a few Months ago stated that Thailands NPL could possibly be as high as 40 % of GDP.

Now that is a worrying statistic .

[Brunolem]

39 minutes ago, Golden Triangle said:

Serious question directed at those on here who profess to understand these situations,

 

 

Should I be worried ?

 

 

Most of the risky loans to the small guys are provided by government banks (Thanachart and the likes).

 

If your money is in a private bank (Bangkok Bank...), it's as safe as in any solid international bank.

 

[Banana7]

Recently, within the last 2 months, Bangkok Bank issued USD$750 million in bonds and in October, Kasikorn issued USD$500 millions in bonds to help with their tier 1 capital, which has been eroding due to NPLs. Other banks have also issued bonds this year, and more bank bonds may be issued in the near future. Also BOT has forbidden Thai banks to pay dividends or do share buy backs which has resulted in depressed share prices for Thai banks.

 

This is one reason why the baht remains strong against foreign currencies. Billions of USD are coming into Thailand to help the Banks.

 

 

[Cake Monster]

With all this Money flowing into the Thai Banks, it will also assist in there credit ratings, which in turn will make it easier and cheaper for them to borrow Money in the future.

The fact still remains that Household Debt, and Business Debt is through the roof, and the ever increasing threat of NPL is weighing heavily on the Banks right now, and defaults are to be expected. The only question is how big the fall is going to be..

[Leaver]

3 hours ago, Kwasaki said:

Bangkok bank is supposed to be bullet proof. 

How could they take my money.? 

If everyone wanted their money out of Bangkok Bank, around the same time, (a run on the bank) then it's possible no one gets their money, or, withdrawals would be limited to maybe 3000 baht a day, for example.

 

At this stage, they haven't "taken" your money, they are just not giving it back. 

 

If everyone continues to withdraw their 3000 baht a day, over a sustained period, then the Thai government either bails out Bangkok Bank, or they allow a bail in, which means you lose some of your money which will be used to prop up the bank.  Or, they simply allow Bangkok Bank to go broke, and you lose the lot.  How much do you trust the Thai government?

 

As the OP suggested, best to get in before a run on the bank, and that's any bank here.

 

Before you ask, "What about next year's visa?"  That will be the least of your problems, should the multitude of bad debts that Thai banks have taken on over decades start to fail over the next few months and beyond.  

 

Edited October 16, 2020 by Leaver

[Leaver]

2 hours ago, Golden Triangle said:

Serious question directed at those on here who profess to understand these situations,

 

 

Should I be worried ?

 

 

Worried, no.  

 

Concerned, yes.

 

Get your money out while it's still there to get.  

[billd766]

3 hours ago, Cake Monster said:

The very last thing that BOT and the Government want is a huge showing within the Commercial Banking System of NPL.

By  placing default and delinquent Loans into " special mention Loans " which are Loans that are between 30 and 90 Days overdue on repayment, the BOT hopes to keep the Investment confidence high within the Country for Foreign Investors.

The Share prices of the Banks will also stay bouyant due to these measures being taken.

However ! ,  All will go well, as long as the Interest OR the principle on the Loans gets paid by the debtor s in " Special Mention "

But if these debtors default on the agreed payments, they will rapidly convert into NPL Loans, and a projection a few Months ago stated that Thailands NPL could possibly be as high as 40 % of GDP.

Now that is a worrying statistic .

I would have thought that any Foreign investors would employ very good accountants and auditors to sniff out nasty things like this. Does the BoT think that any Foreign investors would be so stupid as to invest in Thailand without due dilligence?

[Leaver]

3 hours ago, Cake Monster said:

However ! ,  All will go well, as long as the Interest OR the principle on the Loans gets paid by the debtor s in " Special Mention "

Isn't that the same debtor that already defaulted?  Where do they suddenly get the capacity to repay?

 

3 hours ago, Cake Monster said:

But if these debtors default on the agreed payments, they will rapidly convert into NPL Loans, and a projection a few Months ago stated that Thailands NPL could possibly be as high as 40 % of GDP.

Now that is a worrying statistic .

Strap yourself in. 

 

Tourism was worth around 17% of GDP, on the books, but how many Thai's did the tourism industry employ, either directly, or indirectly, not to mention the sex trade?  It's been non existent for months, with no sign of it coming back soon, and many Thai's have sold the family's silverware just to stay afloat.  The first bill they will not pay is a loan.   

[Leaver]

1 hour ago, Banana7 said:

Recently, within the last 2 months, Bangkok Bank issued USD$750 million in bonds and in October, Kasikorn issued USD$500 millions in bonds to help with their tier 1 capital, which has been eroding due to NPLs. Other banks have also issued bonds this year, and more bank bonds may be issued in the near future. Also BOT has forbidden Thai banks to pay dividends or do share buy backs which has resulted in depressed share prices for Thai banks.

 

This is one reason why the baht remains strong against foreign currencies. Billions of USD are coming into Thailand to help the Banks.

 

 

In my opinion, given the current global financial circumstances, this is unsustainable.    

[Leaver]

7 minutes ago, billd766 said:

I would have thought that any Foreign investors would employ very good accountants and auditors to sniff out nasty things like this. Does the BoT think that any Foreign investors would be so stupid as to invest in Thailand without due dilligence?

Wait till they start shorting them.  

[Kwasaki]

1 hour ago, Leaver said:

As the OP suggested, best to get in before a run on the bank, and that's any bank here

Just a scaremongering thread if you ask me.

Bangkok bank has a bank in the UK maybe other places too.

Every country has financial problems.

 

[Leaver]

3 minutes ago, Kwasaki said:

Just a scaremongering thread if you ask me.

Bangkok bank has a bank in the UK maybe other places too.

Every country has financial problems.

 

It's your money to do as you chose.  All I am saying is your home country is probably safer than Thailand, but I don't know where you are from.  

 

I trust my home country and banks over Thailand and Thai banks.  I transfer over living expenses on a monthly basis.  I have very little to lose here, and that's by design.   

[sanuk711]

5 hours ago, Banana7 said:

Best to take your cash out the banks.

It seems that you can not go on to T.V. now, without some-(expert)-one handing out the fear pills.

 

If in doubt go onto to Google and ask if Thailand is worse of now then the 1997 crash......NOT EVEN CLOSE....

I was here for that and the BKK Bank etc didn't collapse or take one baht of mine or everyone's money then.

[Leaver]

20 minutes ago, sanuk711 said:

It seems that you can not go on to T.V. now, without some-(expert)-one handing out the fear pills.

 

If in doubt go onto to Google and ask if Thailand is worse of now then the 1997 crash......NOT EVEN CLOSE....

I was here for that and the BKK Bank etc didn't collapse or take one baht of mine or everyone's money then.

So, you have confidence in Bangkok Bank based on how they handled a crash 23 years ago.   

 

Do you have the same confidence in the current Thai government as you did in the Thai government that was in power 23 years ago?   

[robblok]

1 hour ago, Kwasaki said:

Just a scaremongering thread if you ask me.

Bangkok bank has a bank in the UK maybe other places too.

Every country has financial problems.

 

Indeed just scaremongering, the people have been saying the sky is falling for so long it becomes boring.

 

Besides money up to a certain limit believe its 1 million is guaranteed by the government. 

[Kwasaki]

Just now, robblok said:

Indeed just scaremongering, the people have been saying the sky is falling for so long it becomes boring.

 

Besides money up to a certain limit believe its 1 million is guaranteed by the government. 

Yeah agree.

Well I've kept 400,000 in the bank for 14 years for the marriage extension i

I don't believe it's not safe in a Thai bank.

To replace it would cost nearly twice as much nowadays.

[Leaver]

26 minutes ago, robblok said:

Besides money up to a certain limit believe its 1 million is guaranteed by the government. 

Do you trust the Thai government?  Simple question?

[Leaver]

18 minutes ago, Kwasaki said:

Yeah agree.

Well I've kept 400,000 in the bank for 14 years for the marriage extension i

I don't believe it's not safe in a Thai bank.

To replace it would cost nearly twice as much nowadays.

The financial world is in unchartered waters. 

 

Historical performance means nothing in 2020 with Covid.  

[Banana7]

6 hours ago, Cake Monster said:

With all this Money flowing into the Thai Banks, it will also assist in there credit ratings, which in turn will make it easier and cheaper for them to borrow Money in the future.

The fact still remains that Household Debt, and Business Debt is through the roof, and the ever increasing threat of NPL is weighing heavily on the Banks right now, and defaults are to be expected. The only question is how big the fall is going to be..

No that's wrong. The money flowing into banks is debt, basically bonds, issued by the banks. Their credit ratings will be reduced because debt increases. The more debt you have, the higher interest rates will go because because you pose a greater risk of not repaying because of increased interest payments.

 

If your first tranche for $500 million, was at 5%, the second tranche of another $500 million will defiantly be higher than 5% .

 

The other issue for the bond holders is that the issued bonds are perpetual bonds, with no due date. The only way you get your initial payment back is by selling the bond to another entity. If bank debt increases, credit risk increases, the bond face value will decrease, so that a new buyer will want a higher interest rate. Buyer A paid a $100 for a bond and got an annual payment of $5 (5%), when he tries to sell it, he may only get $90 or less, if the bank's credit rating has decreased. The new buyer's interest payment will still be $5 but the rate will have increased to 5.5% (5/90 = .055). Buyer A will have a net loss of $5 after holding the bond for a year in this scenario.

 

The bond money coming into the banks is being used to increase cash reserves because the reserves are being depleted by giving out cash to the depositors who are withdrawing their money, and also to pay for bank operating expenses. The bank doesn't have enough of the depositor's money because they loaned the money to someone who is not paying their debt on-time or as agreed.

 

 

 

 

Edited October 16, 2020 by Banana7

[Brunolem]

10 hours ago, robblok said:

 

Besides money up to a certain limit believe its 1 million is guaranteed by the government. 

It is 5 million until August 2021.

[Brunolem]

9 hours ago, Leaver said:

Do you trust the Thai government?  Simple question?

You have to trust the government if your account is in one of the government banks.

 

Private banks have nothing to do with the government.

 

Their superior authority is the central bank.

[Kwasaki]

11 hours ago, Leaver said:

The financial world is in unchartered waters. 

 

Historical performance means nothing in 2020 with Covid.  

It's still scaremonger thread and absolute nonsense.

Even OP rabbiting on about money borrowed and not being paid back.

Last I heard is that money borrowed still has to have securities from the borrower or you don't get it.  

[BritManToo]

14 minutes ago, Kwasaki said:

It's still scaremonger thread and absolute nonsense.

Even OP rabbiting on about money borrowed and not being paid back.

Last I heard is that money borrowed still has to have securities from the borrower or you don't get it.  

My daughter at university bought a new Honda Click on credit (60k ......... with credit 120k to be repaid)

She owns nothing and earns nothing, their only security is their ability to repossess ........ if they can find it.

You may consider that security, I'd call it a risky loan.

 

My former wife (unemployed all her life) purchased a new house on 1,500,000 credit.

She forged 6 months pay slips to get the loan, and 10 years back ran out on 500,000bht loan never recovered.

Their only security is their ability to repossess the house, which nobody would want to buy in the foreseeable future.

You may consider that security, I'd call it a risky loan.

Edited October 17, 2020 by BritManToo

[Kwasaki]

1 minute ago, BritManToo said:

My daughter bought a new Honda Click on credit (60k ......... with credit 120k to be repaid)

She owns nothing and earns nothing, their only security is their ability to repossess ........ if they can find it.

You may consider that security, I'd call it a risky loan.

You talking Thailand and I think your daughter bought from a bike shop desperate to sell without wanting a guarantor.   

Not the same as loaning from a bank.

[Banana7]

3 hours ago, Kwasaki said:

It's still scaremonger thread and absolute nonsense.

Even OP rabbiting on about money borrowed and not being paid back.

Last I heard is that money borrowed still has to have securities from the borrower or you don't get it.  

Sure, the bank has collateral for the loan. Unfortunately, the collateral is not worth the amount the bank thinks it is and sometimes that collateral is significantly less than the loan balance. Also the banks incurs collection and repossession charges,, and may have to go to court to repossess large assets like houses, and all this takes time.

 

See post #98 and others in this thread. It shows one bank wants 18M baht when a similar property is being offered for 12M baht. Just think if the bank loaned your money and can't recover a third of it!!

 

Edited October 17, 2020 by Banana7

[Airalee]

What I’d like to see is something like the Credit Suisse ARM reset chart from 2007.  It was like a roadmap for the forthcoming crash.