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Siam Commercial Bank: Small, medium businesses to be hit hardest by economic meltdown

BANGKOK: -- Thailand’s small- and medium-size enterprises (SMEs) are expected to bear the brunt of the ongoing economic meltdown this year as they must face liquidity crunches, exchange rate risks, interest rate volatility, and fierce competition, according to a top banker.

Siam Commercial Bank (SCB) Executive Vice President Vivat Kittipongkosol, who supervises SCB’s Business Banking Group, said the bank realised the situation and has consequently adopted a strategy to help prevent some 30,000 SME customers from becoming non-performing loans (NPLs).

Under the strategy, the bank will be an ally rather than an adversary creditor, to provide small and medium-sized businesses with practical advice and information for their business performance on-line, extending debt repayment periods, injecting liquidity, and building new networks within the group.

Mr. Vivat said the bank will try to control non-performing loans to ensure they do not exceed 5 per cent of the total outstanding loans.

The bank will focus on curbing NPLs in such industries as hotels and hospitality,the automotive sector, and exports because they run a high risk of becoming NPLs.

Under the current circumstances, Mr. Vivat advised that SMEs avoid investing in permanent assets because daily cash flow management is now considered most important.

In addition, SMEs should not keep too large an inventory on hand.

Mr. Vivat affirmed that it is still bank policy to lend to new customers.

“We are not stopping our lending to small- and medium-sized businesses,” the SCB office explains.

“Nonetheless, we estimate that this year’s overall non-performing loans will definitely be higher than last year,” Mr. Visat said, And small and medium businesses will suffer most.

-- TNA 2009-03-05