Central bank assures Thai banking system remains resilient despite S&P downgrade

[webfact]

 

The Bank of Thailand (BoT) says that the Thai banking system has undergone regular stress tests and remains resilient, with a high level of capital buffers to help it to withstand risks and uncertainties, despite S&P Global Ratings’ downgrading of four of Thailand’s commercial banks.

 

S&P downgraded ratings of Siam Commercial Bank and Kasikorn Bank, from BBB+ to BBB, and Krungthai Bank and TMB Thanachart Bank, from BBB to BBB-.

 

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The ratings agency said systemic risk for Thai banks has risen and high leverage among borrowers, amid rising household debt, is likely to persist longer than expected. Its base case scenario also projects the bad loans, held by Thai banks, will grow to 5% over the next 24 months, from the current 3%, which would be the highest since the global financial crisis of 2008.

 

Full story: https://www.thaipbsworld.com/central-bank-assures-thai-banking-system-remains-resilient-despite-sp-downgrade/

 

-- © Copyright Thai PBS 2022-03-23

 

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[Will B Good]

Sounds a bit like the board of directors at a football club giving their wholehearted support to the coach after his fifth straight loss in a row........we all know what happens just after that.

Edited March 23, 2022 by Will B Good

[RubbaJohnny]

A real trade expert Mandy Rice Davis said 

 

"They would say that wouldn't they".

 

International  traffic controller Sydney Powderman will be along soon to help the Hi-so's and So-Hi's

[HappyExpat57]

You can lie to the world but the world isn't buying your bs.

[timendres]

S&P has never helped anyone avoid a bank failure.

[RichardColeman]

17 hours ago, webfact said:

Its base case scenario also projects the bad loans, held by Thai banks, will grow to 5% over the next 24 months, from the current 3%, which would be the highest since the global financial crisis of 2008.

I'd say it was way higher than that now. Makes me laugh seeing a dirt poor Thai in a second hand pair of shorts and repairs flip flops getting out of a new pick up to buy noodles. 

[IgboChief]

The Bank's have liabilities in THB and FX/USD. The Central Bank will always be able to bail them out in THB, but what about the FX?

 

How long will the Central Bank be able to act as Lendor of the Last Resort for the FX Liabilities, when a) USD yields go up (to curb inflation) and b) FX Funding Cost for the Thai Commercial Banks go up from the downgrades?

 

We can't ignore that FX inflows are heavily affected from the lack of tourists (30 Mill. tourists, each spend average 1000 USD -- gives 30 bn. USD inflow every year).

 

Together weak car exports due to high cost of diesel (who would by Hillux trucks!), FX inflow could become a problem.

[hotchilli]

19 minutes ago, RichardColeman said:

I'd say it was way higher than that now. Makes me laugh seeing a dirt poor Thai in a second hand pair of shorts and repairs flip flops getting out of a new pick up to buy noodles. 

I know 3 teachers all under the age of 30 who have bought new cars this year...

I thought teachers were in financial trouble?

[Excel]

Of those 4 banks quoted three of them are the only ones where you can transfer more than 50.000 in one international transaction. Perhaps the "arrangement" they have with obviously the Thai government/BOT is not to the liking of S & P or else they know something we don't to downgrade them.

[thaiowl]

This is the same Bank of Thailand which was overseeing the Thai commercial banks before the Asian Financial Crisis in 1997 and which wasted Thailand's foreign exchange reserves trying to retain the peg to the USD.

[HappyExpat57]

2 hours ago, hotchilli said:

I know 3 teachers all under the age of 30 who have bought new cars this year...

I thought teachers were in financial trouble?

Thai or foreign teachers?

[Enzian]

My bank Krungsri is not on the list so OK. My gf jokes that she and her sister can be happy because they never have enough money in any bank to be able to worry.

[Excel]

2 hours ago, hotchilli said:

I know 3 teachers all under the age of 30 who have bought new cars this year...

I thought teachers were in financial trouble?

Perhaps those teachers don't teach basic economics and financial planning  ????

[Cake Monster]

3 hours ago, RichardColeman said:

I'd say it was way higher than that now. Makes me laugh seeing a dirt poor Thai in a second hand pair of shorts and repairs flip flops getting out of a new pick up to buy noodles. 

A couple of Years or so ago, ' Bloomberg " described Thais as " A Nation of people that drive BMW Cars, but live in Tin Sheds "

Never has that been more true than it is at the present time.

Household Debt has risen by a whopping 14 % of GDP over the last 2 Quarters of 2021. From 86 % of GDP to 100 %

Downgrades are long overdue, as this amount of lending and borrowing is not sustainable, and with the Economy starting to show signs of slowing, a rash of NPL are due to become very real IMO..

[Isaan sailor]

Last year, banks lowered insurance guaranties to one million Baht per individual, per institution.  This doesn’t give one a sense of confidence in the system.

[wasabi]

Just drop USD/THB back to 45.00 and we can call it a day.

[Grusa]

16 hours ago, timendres said:

S&P has never helped anyone avoid a bank failure.

I never realised quite how influential that bakery chain could be. Almost as powerful as Macdonalds!

[John Drake]

4 hours ago, hotchilli said:

I know 3 teachers all under the age of 30 who have bought new cars this year...

I thought teachers were in financial trouble?

Well, they are now.

[John Drake]

Quote

Its base case scenario also projects the bad loans, held by Thai banks, will grow to 5% over the next 24 months, from the current 3%, which would be the highest since the global financial crisis of 2008.

And my wife's family will be responsible for at least 8 or 9 of them.

[NoshowJones]

3 hours ago, Isaan sailor said:

Last year, banks lowered insurance guaranties to one million Baht per individual, per institution.  This doesn’t give one a sense of confidence in the system.

I keep the bulk of my money in my UK bank, only keep enough in Thailand for my living expenses. So anyone wanting a large some of money from me are on to plums. I would not trust any Thai bank with my money while the country is run by a bunch of poorly educated tinpot soldiers.

[worgeordie]

So it's down to whom do you trust / believe ,

S & P , or The Bank of Thailand , what was the 

BoT saying before the bubble burst in 97 ,same

thing as today ,I bet .

regards Worgeordie

[Isaan sailor]

32 minutes ago, possum1931 said:

I keep the bulk of my money in my UK bank, only keep enough in Thailand for my living expenses. So anyone wanting a large some of money from me are on to plums. I would not trust any Thai bank with my money while the country is run by a bunch of poorly educated tinpot soldiers.

The lowered insured cash amounts can help in unforeseen ways.  When family members ask for loans or handouts, my wife explains to them I must keep Baht in bank at all times now for my visa requirement.

[AnotherFarang8]

Relevance of western ratings (S&P, Fitch) and USD as the world reserve currency is under serious threat as Russia has announced selling natural gas to the list of unfriendly countries for rubles, Saudi Arabia planning to sell oil for Chinese Yuan.
 

This is a multi-currency system in the making, effectively a collapse of the Bretton Woods system of USD trade hegemony. US and Europe have effectively defaulted on their obligations freezing Russian currency reserves, making USD and Euro unreliable currencies to hold. Watch the great bank run as other countries begin to diversify their reserves.

[sawadee1947]

7 hours ago, hotchilli said:

I know 3 teachers all under the age of 30 who have bought new cars this year...

I thought teachers were in financial trouble?

Check next year. Probably the Banks are the new owners of the cars and the teachers you would find riding their push bikes.????

[jollyhangmon]

58 minutes ago, AnotherFarang8 said:

Relevance of western ratings (S&P, Fitch) and USD as the world reserve currency is under serious threat as Russia has announced selling natural gas to the list of unfriendly countries for rubles, Saudi Arabia planning to sell oil for Chinese Yuan.
 

This is a multi-currency system in the making, effectively a collapse of the Bretton Woods system of USD trade hegemony. US and Europe have effectively defaulted on their obligations freezing Russian currency reserves, making USD and Euro unreliable currencies to hold. Watch the great bank run as other countries begin to diversify their reserves.

 

... dream on tovaritzky, nobody will buy your khrap for rubblish ... e.m.b.a.r.g.o.  in 3 - 2 - 1 //

 

[RubbaJohnny]

7 hours ago, thaiowl said:

This is the same Bank of Thailand which was overseeing the Thai commercial banks before the Asian Financial Crisis in 1997 and which wasted Thailand's foreign exchange reserves trying to retain the peg to the USD.

Old saying, use lots of lube if trying to insert a round peg in a square 'ole

[peter zwart]

That doesn't surprise me. I live in the countryside and really everyone here has loans up to their ears which they can absolutely never pay back. If this is a benchmark for large parts of Thailand then you can wait for problems to arise. However, for tourism it would be a good thing.
 

[AnotherFarang8]

27 minutes ago, jollyhangmon said:

 

... dream on tovaritzky, nobody will buy your khrap for rubblish ... e.m.b.a.r.g.o.  in 3 - 2 - 1 //

 

Lol. Embargo would push lifestyles in the west 100 years backwards. For those who will survive a die-off from famine, diseases, roaming marauders, because many will not make it through. April is going to be interesting as European populations, hit by economic sanctions against Russia that backfired, will take their discontent to the streets en masse.

[peter zwart]

1 hour ago, sawadee1947 said:

Check next year. Probably the Banks are the new owners of the cars and the teachers you would find riding their push bikes.????

So next year i can buy a nice and cheap occasion?

[jollyhangmon]

53 minutes ago, AnotherFarang8 said:

Lol. Embargo would push lifestyles in the west 100 years backwards. For those who will survive a die-off from famine, diseases, roaming marauders, because many will not make it through. April is going to be interesting as European populations, hit by economic sanctions against Russia that backfired, will take their discontent to the streets en masse.

 

... yaaawn, just more ridiculous blabbering as expected, wishful thinking (?) at best ...

Now, stroll on pukins b-boy, just don't draw conclusions from your ilks known disgusting behaviour, watch & learn, 555 ...