Banks downgraded as the Thai economy faces a liquidity crisis caused by war and tourism barriers

[Puccini]

On 3/25/2022 at 1:07 PM, itsari said:

Please inform us of the countries that rely on tourism are thriving ...

Please give your definition of "rely on tourism" in the context of your post.

[itsari]

Just now, Puccini said:

Please give your definition of "rely on tourism" in the context of your post.

Meaning that a economy of a country depends on tourism 

 

 

 

[itsari]

7 minutes ago, Puccini said:

Please give your definition of "rely on tourism" in the context of your post.

Such as Thailand

[Puccini]

5 minutes ago, itsari said:

Such as Thailand

On the basis of what criteria do you determine that a country relies on tourism?

Edited March 27, 2022 by Puccini

[WEBBYB808]

On 3/26/2022 at 5:23 AM, morrobay said:

 

Can you answer @JimmyJ

They have been added to and removed from currency  watch list since 2016 to 2021, This is the proof of manipulation.  There is no way its remained strong prior to Covid and through Covid when other global currencies  have not done well.  It's said that the local GDP doesnt imports,  which we now see with Russian Sanctions,  is not the case, as imports have slowed.  We also know that global shipping has suffered due to Covid, and its affected ports loading and off loading, and yet tge THB remained stable while other currincies didn't.   The proof is in the watch list and global reports.  But apparently its catching up to them now, as the rating is being downgraded,  and the the supply chain is being affected  by sanctions on other countries.

[itsari]

3 minutes ago, WEBBYB808 said:

They have been added to and removed from currency  watch list since 2016 to 2021, This is the proof of manipulation.  There is no way its remained strong prior to Covid and through Covid when other global currencies  have not done well.  It's said that the local GDP doesnt imports,  which we now see with Russian Sanctions,  is not the case, as imports have slowed.  We also know that global shipping has suffered due to Covid, and its affected ports loading and off loading, and yet tge THB remained stable while other currincies didn't.   The proof is in the watch list and global reports.  But apparently its catching up to them now, as the rating is being downgraded,  and the the supply chain is being affected  by sanctions on other countries.

I believe the Thai government is in a big quandary.

Why ? Because they depend on imported energy.

If they allow the Thai BAHT to go the way the market invisages there will be problems for the economy.

Simple as that 

[Gulfsailor]

22 minutes ago, WEBBYB808 said:

They have been added to and removed from currency  watch list since 2016 to 2021, This is the proof of manipulation.  There is no way its remained strong prior to Covid and through Covid when other global currencies  have not done well.  It's said that the local GDP doesnt imports,  which we now see with Russian Sanctions,  is not the case, as imports have slowed.  We also know that global shipping has suffered due to Covid, and its affected ports loading and off loading, and yet tge THB remained stable while other currincies didn't.   The proof is in the watch list and global reports.  But apparently its catching up to them now, as the rating is being downgraded,  and the the supply chain is being affected  by sanctions on other countries.

Countries don’t end up on a watchlist for manipulating their currency to keep it artificially strong. It’s about unfair competition in exports, so if anything Thailand was suspected of keeping its currency artificially low in the past. 

[itsari]

12 hours ago, jacko45k said:

So they do not rely on tourism!

Australia and New Zealand do not depend on tourism.

Thank you Jacko

[itsari]

9 hours ago, RafPinto said:

They never use the word "negative equity".

Keep the property prices high on paper.

If prices would fall (what they should), banks have to call for a cash injection because the 90% loan would stand at 100 or more but it's not going to happen as this would bring big troubles to the banks.
And, see around you. Hundreds of new condo blocks being build. Who is buying them?

And, A Nut In is a builder, he doesn't want this market to be affected.

The nut can only be screwed so far

[Walker88]

5 hours ago, Longwood50 said:

One thing is for sure.  Banks are a mirror reflection of the overall economy.  When times are good, people and businesses borrow and banks make good money.  When times are bad, loan volume goes down, people do not have extra money to deposit into the bank, and loans start going unpaid and banks are sickly. 

It is nigh on impossible to compare banking in the US to Thailand. While it is true that banks in the US can fiddle with loan loss reserves in order to alter reported profit (especially if the CEO has options he'd like to see deep in the money), when push comes to shove the banking authorities tend to get responsible....such as in 2009 when Pres Obama forced banks to recapitalize, slash leverage, and issue new equity. The EU took another approach (too long to explain here), but it was a tautology-like solution, and makes EU banks really vulnerable to rate increases....and that in a banking system almost 3 times the size of the US' system.

 

In Thailand, Covid-19 had the authorities make some very Thai alterations to the system. First, there were periods of debt moratoriums, where borrowers didn't have to repay and banks didn't have to recognize what were essentially govt-mandated NPLs. Second, banks apparently were allowed to book 'imputed interest'...running interest through the P&L that wasn't actually being paid. Thus, bank profits were a total fiction.

 

All of this came at a time when Thai household debt kept hitting new records, and when corporates in Thailand had fattened up on debt at an astonishing rate since around 2011. That so-called Boom after 2011 was purely debt-based, as debt rose significantly faster than Thai GDP. That is obviously inefficient.

 

Of course Thailand is hardly alone at debt-fueled growth, as the 4 years in the US before Pres Biden saw the National Debt increase almost 40% ($7 trillion) with GDP growth the worst of any POTUS since the end of WWII.....despite that POTUS' constant claims of 'best economy ever' (when his GDP rate even pre-Covid put him in the bottom Quartile). The US is addressing the mess left by that guy, as the 2021 Fiscal Year deficit is down $350 billion from 2020, and is projected to be as much as $1 trillion lower in Fiscal 2022.

 

Thailand hasn't even begun to address its bank and fiscal issues, and without the almost 19% GDP kick from tourism (2019 official Thai figures) and the likely fall in asset values and collateral, digging out of the debt+Covid mess is likely to take many years.

[WEBBYB808]

3 hours ago, Gulfsailor said:

Countries don’t end up on a watchlist for manipulating their currency to keep it artificially strong. It’s about unfair competition in exports, so if anything Thailand was suspected of keeping its currency artificially low in the past. 

Duh!  That is manipulation 

[connda]

On 3/25/2022 at 2:55 AM, webfact said:

It comes as, S&P, the leading rating agency, downgraded four top Thai banks based on raised systematic risk as the kingdom still faces large losses in foreign tourism income with controlled entry into the country still in place. Officials are hoping to abolish this by July 1st next.

...although all people in Thailand will still be required to wear symbols of conformity to official ideology on their faces while they engage in Temple Tours as night-time entertainment and alcohol consumption will still be illegal until - well - Buddha only knows when. 2023? 24?

[scorecard]

On 3/25/2022 at 4:50 AM, arick said:

Can somebody tell me what the rating is? I can't seem to see it in the article. 

If you mean the current exchange rate for any currency to the Thai Baht check here:

 

- XE Currency / XE Currency Converter, which shows the midrate, always very up to date.

 

The XE site is well respected for it's up to date exchange numbers and it's accuracy by the international banking institutions.

 

The rates not aligned to any specific bank in Thailand or in any country.

 

Edited March 27, 2022 by scorecard

[SmartyMarty]

On 3/27/2022 at 6:05 AM, jacko45k said:

So they do not rely on tourism!

what the figures prove is that despite no tourists, the NZ govt found a way out of the crisis, unlike the muppet govt here who have no clue what to do.

[SmartyMarty]

13 hours ago, itsari said:

Australia and New Zealand do not depend on tourism.

Thank you Jacko

Again completely false claim. Tourism accounted for nearly 19% in NZ pre Covid. Stop the fake news, it's embarrassing.

[Excel]

5 minutes ago, SmartyMarty said:

Again completely false claim. Tourism accounted for nearly 19% in NZ pre Covid. Stop the fake news, it's embarrassing.

New Zealand and also Australia grew strong solely on tourism promoted predominately by a couple of European chaps, one called Tasman in  1642 in the case of NZ and Cook in 1770. Since then travellers visiting, whether by choice, accident or being in the wrong place at the wrong time has allowed those countries to grow into what they are today so hence tourism was vital to their initial growth ????

[onthedarkside]

19 hours ago, moogradod said:

Krungthai has at least a state guarantee for up to 1 Mio THB per account and account holder. True or not ? I am surprized this is a state owned bank - the guarantee should be higher (maybe wrong).

 

Krung Thai and Krungsri/Ayudhya are both covered by the Thai government's 1 million baht deposit protection law.

 

https://www.dpa.or.th/en/articles/view/list-of-insured-financial-institutions

 

Government Savings Bank, as a state entity, simply has the general backing of the Thai government.

 

 

 

 

[Longwood50]

17 hours ago, Walker88 said:

It is nigh on impossible to compare banking in the US to Thailand

I totally agree,

Now as to "fiddling" with loan losses that might be a bit of an overstatement.  A bank is required to have a systematic formula to determine the default risk of its loan portfolio and add to reserves based on that.  The riskier percentage of loans deemed risky the higher the reserve. 

A bank that deems it has a riskier portfolio can add to reserves but that lowers reported Earning Per Share.  If it has excess in reserve and does not add as much, it does increase earnings, but the financial reporting would show a balance sheet with a lower reserve making the bank more risky. 

The point is, that at least in the USA financial reporting gives a reasonably accurate picture of the health of the banks.  They also are required to pass a stress test to determine their financial resiliance. 

I am not familiar with the requirements of Thailand.  However if what you say is accurate and they are booking "imputed income" that is truly COOKING THE BOOKS.  The same would be true if they are still carrying non-performing loans at their book value and not reflecting the depreciated value of collateral that when sold will bring only a fraction of what is owed. 

As I mentioned, a bank is a mirror image of the overall economy.  When times are good, businesses and people borrow in larger volume.  They pay those loans back, and people have extra money to place in the bank as deposits.  When times are tough, loan volume shrinks, loans don't get repaid, and deposits shrink.  

Given the situation with Covid and the lack of tourism, my take is that the banks have to under some stress.  Homes, businesses, and cars repossessed.  Allowing "forebearance" by banks to not repossess the properties may help the borrower but it sure does not help the bank.  It forces them to hold on to non-performing loans and properties longer only increasing their loss.  That would only not be true if somehow the borrower through delaying foreclosure/repossession recovered and was able to bring their loans up to date in the future.  That is a roll of the dice. 

[arick]

On 3/25/2022 at 4:50 AM, arick said:

Can somebody tell me what the rating is? I can't seem to see it in the article. 

Them some very smart person replies and talk about exchange rates 555

[Rimmer]

A flame has been removed

[KhunLA]

On 3/25/2022 at 6:58 AM, DjSilver said:

Great news. More like this and the baht will be where it was 10 years ago.

Careful what you wish for as baht was stronger 10 yrs ago

 

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