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Thai Bank Deposit protection cut to 1 million THB


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Bangkok (NNT) - Thai Banks are to provide deposit protection on only 1 million THB, starting on Aug 11 onwards

 

Thailand’s Deposit Protection Agency (DPA) says such protection will be offered from 11 August 2020 onwards, per individual account holder in one financial institute. The level of protection has been decreased from 5 million THB previously, to 1 million THB.

 

DPA director Songphol Chevapanyaroj, said today the protection covers 82.07 million account holders, accounting for 98.03% of account holders of Thailand.

 

The coverage includes individual and juristic depositors in 18 Thai commercial banks, 12 foreign bank branches, 2 finance companies and 3 credit foncier companies dealing only in the Thai baht currency.

 

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19 minutes ago, Heng said:

That's a confidence booster.   Will move the appropriate amounts offshore, which I assume is their "goal" here.

It's really neither here or there, as most Thai circles of wealth is stored and accumulated elsewhere. 

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10 minutes ago, zzaa09 said:

It's really neither here or there, as most Thai circles of wealth is stored and accumulated elsewhere. 

For the 1 percenters, sure.   For the 5-10 percenters, if they weren't already moving funds out, they certainly are looking or are actively accelerating the process now over the past 3-4 years.   

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7 hours ago, itsari said:

Ominous 

Not ominous at all. It has been planned since about 2011.

 

Government are putting the onus of savings risk on banking institutions and the savers to assess their savings risk and manage their finances around the 1 million baht depositor protection scheme.

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2 minutes ago, userabcd said:

Not ominous at all. It has been planned since about 2011.

 

Government are putting the onus of savings risk on banking institutions and the savers to assess their savings risk and manage their finances around the 1 million baht depositor protection scheme.

The Thai government is also offloading a lot of risk , planned or not planned.

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56 minutes ago, Heng said:

That's a confidence booster.   Will move the appropriate amounts offshore, which I assume is their "goal" here.

How can moving funds offshore be described as a Goverment "goal"?

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2 hours ago, SCOTT FITZGERSLD said:

so if i will have 3 bank accounts, each with 1 million, will the insurance hold for each one of them ,total 3million baht?

It is per depositor per institution for the financial institutions listed by the deposit protection agency.

 

So if your 3 accounts are with one institution and it fails, the sums of money in those 3 accounts will be aggregated and protected up to 1 million baht.

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2 hours ago, fangless said:

How can moving funds offshore be described as a Goverment "goal"?

That's why "goal" is in quotes.  

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There's a moral hazard argument to be made (which I am sure no one in this forum will like) that runs like this: the more that banks are insured against losses, the more likely they are to behave recklessly or take unnecessary risks--because they know they will be bailed out. (The classic example of moral hazard is the "too big to fail" financial institutions in the United States.) On the other hand, if bank insurance is kept to a minimum, then banks are incentivized to behave responsibly--and not fail. Or if a bank does behave irresponsibly, it is allowed to fail. No government bailout. As for the people who lose money in that bank, well, they chose the wrong bank to put their money in. Caveat emptor. That is the theory at least--just putting it out there.

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To me it means few things, *Don't bring your money to us, we don't want it, *We're not good enough to guard it and be responsible for your money, and last but not least, *Saving with banks is a bad idea, keep your money under your mattress it's safer there...

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I thought Thailand has been going no and on and on for years about big spending farang and the need for them.....30,000 dollars is hardly any money....That barely covers a retirement visa.......Its only one or two years living expenses.....

 

I bet millions of Thais have more than 1 million baht, and for a business this is pocket change...

 

This is just a ridiculously small amount of money, and builds zero confidence.. 

 

 

 

 

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the insurance companies are smelling some big risk I suspect, That can only mean one or more Banks are looking 'wobbly'

get it out and buy physical gold and hide it away somewhere safe,  anyone agree ?

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8 hours ago, userabcd said:

Not ominous at all. It has been planned since about 2011.

 

Government are putting the onus of savings risk on banking institutions and the savers to assess their savings risk and manage their finances around the 1 million baht depositor protection scheme.

Sir you must be joking.......When it was planned does not change anything..

 

1 million baht is a tiny tiny amount of money when it comes to running a business, life savings, investing, retirement etc....Its VERY OMINOUS...

 

What saver could know everything about a banks operation? No one can know everything.....

 

Even 5 million is way to little but 1 million is just laughable....

 

Well I guess that's it for investing in Thailand for many.....

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I'm normally the suspicious and worried type, but in this case I'm not feeling that way.  Yes, initially I was worried, but upon reflection, I'm not that bothered.  First, the plan all along was to lower by steps the insured value down to 1 million (initially it was 100,000,000!), and the banks (or government, whoever decides this) extended the period much longer than they had initially planned.  Secondly, if you compare 1 million Baht to the FDIC insured value in the USA of 250,000 dollars, and then compare median incomes of the two countries, you'll see they're basically on par.  With median income of about 1/7 of the US, Thailand's new rate is about 1/8 of the US, if you convert baht to dollars.  You can deposit up to 1,000,000 baht in each bank (not branch), and I assume that's to spread the risk, in the event one institution fails.  

 

Trust me I still agree with much that is written here, but my analytical side says it's not as big a worry as it might appear and feel.  Still, it is wisest to take the safest route when it comes to protecting money.  

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9 hours ago, fangless said:

This is not sudden.  It was announced sometime ago!

Yes I believe it was a multi-step process. Nevertheless it seems counter productive and will persuade people to limit their cash deposits... and they don't make it easy to have multiple accounts at different banks. I have to keep 800k for my retirement extension, leaving me 200,000 to live on.... hardly makes sense. I may want to self insure for a million as well, and that money is now less secure?

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3 hours ago, ezzra said:

To me it means few things, *Don't bring your money to us, we don't want it, *We're not good enough to guard it and be responsible for your money, and last but not least, *Saving with banks is a bad idea, keep your money under your mattress it's safer there...

And when it is time to renew your visa take your mattress to Immigration

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20 minutes ago, jacko45k said:

Yes I believe it was a multi-step process. Nevertheless it seems counter productive and will persuade people to limit their cash deposits... and they don't make it easy to have multiple accounts at different banks. I have to keep 800k for my retirement extension, leaving me 200,000 to live on.... hardly makes sense. I may want to self insure for a million as well, and that money is now less secure?

I'll look after it for you if it helps..................?

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1 hour ago, Scrotobike said:

I think most Thais (certainly in Issan) are not affected - only the HiSo and other of their ilk. They dream of 1m Bhat.

Try buying land off them in Isan and that 1m or 2m baht comes out

there gob's so quick,  2 rai 2m family friend,  ha ha

2 rai 2m baht next door neighbor, what a laugh.

Building on family land for free. not worth investing to much money in Thailand now days.

 

BTW.  All non Thai Hiso's, just want to be HiSo's.

same same, but same. !!!!!!LOL.

 

 

 

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6 hours ago, Roy Baht said:

There's a moral hazard argument to be made (which I am sure no one in this forum will like) that runs like this: the more that banks are insured against losses, the more likely they are to behave recklessly or take unnecessary risks--because they know they will be bailed out. (The classic example of moral hazard is the "too big to fail" financial institutions in the United States.) On the other hand, if bank insurance is kept to a minimum, then banks are incentivized to behave responsibly--and not fail. Or if a bank does behave irresponsibly, it is allowed to fail. No government bailout. As for the people who lose money in that bank, well, they chose the wrong bank to put their money in. Caveat emptor. That is the theory at least--just putting it out there.

Your argument is right, of course, but proper due diligence on the part of consumers seems to require a transparency level that doesn't exist. In fact, it PURPOSELY doesn't exist, so as 'not to scare depositors'.

 

Right now there are all sorts of debt moratoriums and creative accounting that blocks everyone from getting a grip on the financial position of any bank. What is the real NPL level, when the very definition of NPL has changed due to Covid 'allowances'? I believe banks can also recognize imputed interest as income, even though the debt moratorium allows for non-payment (but accrual). So a bank's P&L is effectively meaningless, as is their stated level of NPLs.

 

Thailand is not alone in allowing smoke and mirrors in the banking system. In the US and EU, derivatives tend to be OBS, so who knows how big a bank's exposure is? Then there's those SIVs, (Special Investment Vehicles) which are also carried off balance sheet. Remember that when Synthetic CDO Squareds with a Credit Default Swap Kicker were so opaque that BOTH sides holding opposing positions (such as in a CDS) could book a 'profit'. That didn't end well in 2009.

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10 hours ago, Heng said:

That's a confidence booster.   Will move the appropriate amounts offshore, which I assume is their "goal" here.

You would think with baht going down the protection would be going up?

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They have been warning about this for years.

 

This will help foreign cash outflow putting more pressure on the baht.

 

Thanks.

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