Is Thailand really immune to the banking turmoil in the US and Europe?

[webfact]

 

The global financial markets are highly interconnected. When Thailand’s banking system suffered a collapse and the baht’s value plummeted in 1997, the contagion effect spread to other Asian countries. Similarly, one saw the global financial crisis triggered by the collapse of Lehman Brothers Bank in the United States in 2008. 

 

Recently, US regulators had to shut down two regional banks — Signature Bank (SB) and Silicon Valley Bank (SVB). SB’s core business was related to cryptocurrency while SVB largely serviced startup companies and venture capitalists.

 

Crypto crisis

 

Since last year, the crypto market has been in serious trouble. There are many factors that can be attributed to the industry’s predicament.

 

Firstly, the valuation of bitcoin and other cryptocurrencies plunged sharply after the US Federal Reserve aggressively hiked its policy rates to fight rampant inflation.

 

Full story: https://www.thaipbsworld.com/is-thailand-really-immune-to-the-banking-turmoil-in-the-us-and-europe/

 

-- © Copyright Thai PBS 2023-03-29

 

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[hotchilli]

Teflon Thailand... 

[Purdey]

Thai banks will always so no problem, right up until they collapse.

[ikke1959]

Surely not, but as usual they don't see anything until it is too late...

[Cake Monster]

9 minutes ago, ikke1959 said:

Surely not, but as usual they don't see anything until it is too late...

And with all the Money being Loaned out at the moment, "too late " may not be so far away.

Household Debt must have surged past the 100 % to GDP by now

[ed strong]

As long as they don't have a bank run it will be fine.

 

Not sure why you mention crypto, how on earth does the price of that effect banking reserves?

[nigelforbes]

39 minutes ago, Cake Monster said:

And with all the Money being Loaned out at the moment, "too late " may not be so far away.

Household Debt must have surged past the 100 % to GDP by now

Nope, it's actually falling, 84%, which it would do anyway if GDP increases.

 

https://www.kasikornresearch.com/en/analysis/k-econ/financial/Pages/Household-CIS3383-Web-B-21-02-2023.aspx

 

But so what if it was equal to whatever of GDP, as long as the money is repaid there's no financial problem for the banks. And it is being repaid, NPL's are still very low by any measure, 2.73% as of February.

Edited March 29, 2023 by nigelforbes

[Yellowtail]

In the US it's just too much cheap money out on long term loans. 

 

If a bank has a lot of thirty-year, fixed-rate mortgages out at <3%, and the bank has to pay >4% to get cash into the bank, it's tough times ahead for the bank. 

 

I doubt very much Thai banks are as over extended. 

[connda]

Is Thailand really immune to the banking turmoil in the US and Europe?

Nope.  When the bubble burst it will be global contagion with maybe the exception of Russia as they are cutting themselves off (due to sanctions) from Western banking.  Thailand.  It will go down with the ship although I have a feeling that Asia in general MAY come out of it less battered then the West.

[connda]

19 minutes ago, Yellowtail said:

In the US it's just too much cheap money out on long term loans. 

 

If a bank has a lot of thirty-year, fixed-rate mortgages out at <3%, and the bank has to pay >4% to get cash into the bank, it's tough times ahead for the bank. 

 

I doubt very much Thai banks are as over extended. 

Short Term T-Bill are between 4% to 5%.  Haven't seen returns like that for well over a decade.  Banks in Thailand don't give you diddly-squat for interest.
I'm considering moving excess funds back to the US.
And capital flight back to USD may eventually become a problem for Thai banks.

Edited March 29, 2023 by connda

[nigelforbes]

1 minute ago, connda said:

Is Thailand really immune to the banking turmoil in the US and Europe?

Nope.  When the bubble burst it will be global contagion with maybe the exception of Russia as they are cutting themselves off (due to sanctions) from Western banking.  Thailand.  It will go down with the ship although I have a feeling that Asia in general MAY come out of it less battered then the West.

I think so too.

[Yellowtail]

24 minutes ago, connda said:

Short Term T-Bill are between 4% to 5%.  Haven't seen returns like that for well over a decade.  Banks in Thailand don't give you diddly-squat for interest.
I'm considering moving excess funds back to the US.
And capital flight back to USD may eventually become a problem for Thai banks.

And as long Thai banks don't have to pay diddly-squat to get cash in, they should be okay. 

 

My US bank is Chase, and you can get >3% on a 12-month CD. 

 

With the gubment now guaranteeing all deposits, I am more concerned about the currency than the banks. 

 

I'm not worried about the Baht or Thail banks, and I'm betting equities in the US. 

[swissie]

2 hours ago, Cake Monster said:

And with all the Money being Loaned out at the moment, "too late " may not be so far away.

Household Debt must have surged past the 100 % to GDP by now

Like Italy?

Italy: No economic growth. Thailand: Have nice economic growth. That's the difference. It's all "relative".

[swissie]

Thai Banks are not major players in international "Investment Banking" (that's where the major risks lurk). Their Domestic Risks are manageable.

If in doubt, not deposit more than 1 million Bht in a single Thai Bank. The magic word: "diversification".

At any rate, the situation is not comparable to 1997.

 

[Thingamabob]

Thai banks definitely not immune, just as they were not immune in 1997/8 and 2008.

[Yellowtail]

6 minutes ago, Thingamabob said:

Thai banks definitely not immune, just as they were not immune in 1997/8 and 2008.

What Thai banks failed in 2008?

 

What about 1997/8, how many Thai banks failed?

[scottiejohn]

12 minutes ago, Yellowtail said:

What Thai banks failed in 2008?

 

What about 1997/8, how many Thai banks failed?

Have you tried asking Google?

[nigelforbes]

20 minutes ago, Yellowtail said:

What Thai banks failed in 2008?

 

What about 1997/8, how many Thai banks failed?

See page 219.

 

56 FC's closed, 4 banks nationalized.

 

https://www.bis.org/publ/plcy06h.pdf

 

One major FC at the very heart of the matter managed to stay open and later became a bank, recently that bank merged with another Thai bank that is part foreign owned!!!

[kickstart]

25 minutes ago, Yellowtail said:

What Thai banks failed in 2008?

 

What about 1997/8, how many Thai banks failed?

 

25 minutes ago, Yellowtail said:

What Thai banks failed in 2008?

 

What about 1997/8, how many Thai banks failed?

As far as I know one bank failed in 1995 ,The Bangkok Bank of Commerce, the 1997 crash no banks crashed.

[Yellowtail]

15 minutes ago, nigelforbes said:

See page 219.

 

56 FC's closed, 4 banks nationalized.

 

https://www.bis.org/publ/plcy06h.pdf

 

One major FC at the very heart of the matter managed to stay open and later became a bank, recently that bank merged with another Thai bank that is part foreign owned!!!

So none of the banks failed, that's what I thought, thanks! 

[nigelforbes]

26 minutes ago, Yellowtail said:

So none of the banks failed, that's what I thought, thanks! 

One was nationalized but technically it didn't fail. The key point however is that the majority of lending at the time was done through Finance Companies, technically not banks at the time but effectively banks.

[In the jungle]

Crypto is not proper money.  Why would the reporter be mentioning it?

 

Crypto is for idiots and gamblers.

[swissie]

3 hours ago, Yellowtail said:

What Thai banks failed in 2008?

 

What about 1997/8, how many Thai banks failed?

None in Thailand,

[RichardColeman]

I fully predict the dollar to collapse before long anyway. Once it is stopped being used for certain items like oil, etc, there will be no demand for it.

 

Tough times ahead for the US, especially with Joe printing money 24/7

 

 

[nigelforbes]

8 hours ago, swissie said:

None in Thailand,

But 56 out of 58 Finance Companies did.

[nigelforbes]

1 minute ago, RichardColeman said:

I fully predict the dollar to collapse before long anyway. Once it is stopped being used for certain items like oil, etc, there will be no demand for it.

 

Tough times ahead for the US, especially with Joe printing money 24/7

 

 

There is nothing waiting in the wings that is even nearly close to being able to replace the Dollar, as much as we might wish there was. Using other currencies to pay for oil is not a big deal because whatever currency is used is referenced back to USD. The big deal is what the Reserve Currency will be that sits at the top of the FOREX tree, if USD crashes, so do all other currencies.

[Cake Monster]

14 hours ago, nigelforbes said:

Nope, it's actually falling, 84%, which it would do anyway if GDP increases.

 

https://www.kasikornresearch.com/en/analysis/k-econ/financial/Pages/Household-CIS3383-Web-B-21-02-2023.aspx

 

But so what if it was equal to whatever of GDP, as long as the money is repaid there's no financial problem for the banks. And it is being repaid, NPL's are still very low by any measure, 2.73% as of February.

I find it difficult to believe the GDP has fallen from around 96 % to 84% in about 5 Months or so.

Money is being Loaned at an Insane pace at the moment to try and get Thais on the property ladder, as only roughly only 20 % of all Loans are secured, and Thailand has a potential problem in its credit rating due to this fact.

Tourism has not taken up the slack from a 4.5 % drop in Exports and a slowing in Manufacturing, which will mean the GDP is roughly the same..

NPL Loans may be low, but a huge amount has been taken into special measures and management programs to keep this number low.

[nigelforbes]

2 minutes ago, Cake Monster said:

I find it difficult to believe the GDP has fallen from around 96 % to 84% in about 5 Months or so.

Money is being Loaned at an Insane pace at the moment to try and get Thais on the property ladder, as only roughly only 20 % of all Loans are secured, and Thailand has a potential problem in its credit rating due to this fact.

Tourism has not taken up the slack from a 4.5 % drop in Exports and a slowing in Manufacturing, which will mean the GDP is roughly the same..

NPL Loans may be low, but a huge amount has been taken into special measures and management programs to keep this number low.

GDP has not fallen etc etc, Consumer loans as a percentage of GDP has, along with which, GDP has increased which causes the CS loans percentage to fall. Article follows:

 

https://www.reuters.com/markets/asia/thai-cbank-wants-see-household-debt-below-80-gdp-2023-02-14/#:~:text=Thailand's household debt stood at,of 2022%2C among Asia's highest.

 

This is the quarterly trend with a one quarter lag:

 

https://tradingeconomics.com/thailand/households-debt-to-gdp

 

The most recent quarterly report on GDP hasn't been issued yet, we're still in March. But the latest quarterly report showed increases in GDP, albeit slight. My observation is that if Thailand can maintain GDP rather than let it fall, given the present economic climate globally, that will be a job well done.

 

https://www.nesdc.go.th/nesdb_en/article_attach/article_file_20230217092855.pdf

 

I don't see any evidence to confirm that "money is being loaned at an insane rate to get Thai's on the property ladder". I also don't see evidence that CS loans moving into special measures has increased.

 

I agree, the fact that only circa 20% of loans are secured on RE is worrying.

 

 

[Yellowtail]

19 hours ago, nigelforbes said:

One was nationalized but technically it didn't fail. The key point however is that the majority of lending at the time was done through Finance Companies, technically not banks at the time but effectively banks.

I don't doubt there were any number of massage parlors that failed as well, but I was asking about banks. I'm more concerned about losing my meager savings than I am how many NPLs are funded by rich investors. 

[nigelforbes]

5 minutes ago, Yellowtail said:

I don't doubt there were any number of massage parlors that failed as well, but I was asking about banks. I'm more concerned about losing my meager savings than I am how many NPLs are funded by rich investors. 

You don't seem to understand the point. The banking loan model changed after the crash, prior to 1997, a majority of consumer lending was in the hands of loan companies, nearly all of which were closed down after the crash and bank lending transferred to the banks, under the regulated auspices and control of BOT.

 

I regret I don't understand your comment about NPL funding. Exactly why non performing loans would be founded by a rich investor escapes me.

Edited March 30, 2023 by nigelforbes