Thailand’s financials are sound but the economy is exposed if another banking crisis emerges

[webfact]

Assistant Governor of the Financial Institution Supervisory Division at the Bank of Thailand, Ms Suwannee Jesadasak on Monday was quick to assure the public and investors that Thailand’s financial system was not exposed to the failure of two banks in the United States last weekend including the substantial Silicon Valley Bank (SVB) in California.

 

by Joseph O' Connor

The impact of the financial crisis in 2008, although not directly impacting Thailand, did result in a disruption to investment patterns which saw ฿500 billion withdrawn by foreign investors from the Stock Exchange of Thailand (SET) and a new climate of reduced investment in the Thai economy.

 

With China’s economy now having to contend with reduced growth in the longer term as well as its own property and banking crisis, the danger of further instability on world financial markets would be very bad news for Thailand’s economic prospects no matter how sound or well capitalised the kingdom’s financial sector appears to be.

Thailand’s central bank and key government officials on Monday and Tuesday were confident that the failure of several US banks including the Silicon Valley Bank (SVB) in California and the Signature Bank in New York would not impact the kingdom’s financial system. However, top analysts in Bangkok are not so certain that the danger of the situation has passed as elevated interest rates not only in the United States but across the world may lead to further unknowns within the global financial system sparking another possible threat to a world already suffering from hampered trade and geopolitical conflict. 

 

Full story: https://www.thaiexaminer.com/thai-news-foreigners/2023/03/15/real-economy-exposed-to-world-banking-crisis-svb-bank-failure-us/

 

-- © Copyright Thai Examiner 2023-03-15

 

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[Henk Langeweg]

They're always sound till they're not ...

[ignore it]

But...but...

The Chinese overlords ain't happy...

[nigelforbes]

From the OP link above.

 

"highlight Thailand’s strong financial sector with padded levels of capital reserves and a very low level of foreign debt, with over 98% borrowed at home in Thai baht, as insulating the kingdom, to a great extent, from any possible contagion or threat that may develop. Thailand retains one of the most well-capitalised financial systems not only in Asia but in the world which makes the baht an attractive currency for speculators".

 

On the other hand, no bank in Thailand features in the top 50, best Tier 1 capitalised banks so make of this what you will. I think however the statement above is probably true since Thai banks borrow and lend in THB, almost exclusively hence there is almost no foreign currency risk.

 

https://www.thebankerdatabase.com/index.cfm/search/featured