Bot Defends Thai Banks' Credibility

[roamer]

No smoke without fire ?

BoT defends Thai banks' credibility

By: BangkokPost.com

Published: 27/05/2009 at 03:13 PM

The overall financial position of the 11 commercial banks in Thailand is very strong, Bank of Thailand deputy governor Atchana Waiquamdee said on Wednesday.

Her comment came after Moody's Investors Service said it was preparing to review the credibility of 11 banks in the country and they face a possible downgrade.

The 11 banks are Bangkok Bank, Bank of Ayudhya, Export-Import Bank of Thailand, Government Housing Bank, Kasikorn Bank, Krung Thai Bank, Siam City Bank, Siam Commercial Bank, Standard Chatered Bank Thailand, Thai Military Bank and United Overseas Bank Thailand.

She said the commercial banks' risk based capital under the Bank for International Settlement standard stood at 14.5 per cent and she could not see how financial problems would arise.

The capability of Thai authorities to assist the banks was also at an acceptable level, she said.

Siam City Bank president Chaiwat Uthaiwan said he was not concerned about the possible downgrade because the result of the review by Moody's could be positive.

He said a downgrade may affect the issuance of debt securities and investors' confidence.

He predicted the position of Thai banks in the second half of 2009 would improve if the political situation does not affect economic stability.

It would not be necessary for Thai banks to raise extra funds as the country still had abundant liquidity, he said.

[davejonesbkk]

A bit unexpected, I thought the banks had been doing ok here?

[Lite Beer]

Moved to here.

[ilovefashionTV]

A bit unexpected, I thought the banks had been doing ok here?

On what grounds did you think that?

[Maigo6]

A bit unexpected, I thought the banks had been doing ok here?

On what grounds did you think that?

Cos they're not run by Farangs, and have not collapsed.

[neil324]

Shamefully copy and pasted from another forum, no links. But no smoke without fire again.

The recent rally in the £UKP does not seem to be due to anything other than dollar weakness against the UKP which hit 1.60 to the USD this morning and caused the £UK to rise to just on 55 but in fact the dollar has lost near on 1,5 Baht in recent weeks.

I bought money over to Thailand late last night. I do this by calling my UK bank which I did at 3.30pm UK time yesterday. This morning at 9.30am I had a call from my bank here to say it had arrived already and the rate I was given was 54.60. The girl called it a special rate and I asked what this means. She said they were not suposed to talk about it so I guessed and asked her if the bank was expecting the Baht to fall more today as I have three days to decide on converting it after it arrives.

The thing here is that the Baht true rate was sitting at 54.90 at the time and to only make a deduction of 0.3 of a Baht is unusual as the norm is 0.6 of a Baht commission taken by the bank. She said yes that they had been told to expect the Baht to fall in the next few days. Obviously if that happens they want people to confirm acceptance of the rate offered immidiatelly. I did accept that as I prefer the bird in the hand to the one in the bush.

But according to the newspapers here Thailand is running into bigger financial problems than had ever been forecast or expected. The government says it needs a loan of 800 Billion Baht to see it through the next 2 years and if approved it will borrow 400 billion Baht as soon as possible. That is nearly 12 billion $USD with another 12 billion $USD needed next year.

So with the world economy in such a mess and Thailand in a particulary messy situation, who is going to want to lend to them? The IMF might even be wary after the last fiasco even though the loans were repaid early but for sure anyone lending is going to want their pound of flesh in high risk interest to an unstable government. For that sort of money if the IMF come in to help then there will be some rules laid down also as there were the last time.

In August 97 the IMF and others came in to help Thailand who was close to Bankrupt with a loan of about $14.5 Billion and this one looks to be far bigger at $24 Billion.The financial restraints put on Thailand during the repayment term amounted to almost total control of the Thai economy which acted as a spur to the Thai government to get rid of the loan 2 years early but by then stability had returned to a Thailand that was pretty prosperous.

That mess appears to have been caused by a speculator run on all the Asian currencies after some got in unexpected difficulties almost over night. This time it seems that Thailand is the first Asian country to declare it's emergency but I expect other countires will follow Thailands lead and jump on the borrowing band waggon fast whilst there is still money to be had from abroad where things are already tight due to the Western crises.

IMHO this is bound to send the Baht off track eventually and we might just see that market correction starting soon. Not good news for Thailand of course but is might just do the trick by making Thailands exports cheaper and kick starting the Tourist industry if the Baht falls enough.

I am no expert on this and welcome the views of others more qualified.

QUOTE Published on May 27, 2009

Korn has 'contingency plans' if bid to raise Bt400 bn rejected as unconstitutional

The Constitution Court will hand down its verdict next Wednesday on the government's plan to raise funds via an executive decree.

If the judges rule in favour of the government, fund disbursement could take place as early as September, Finance Minister Korn Chatikavanij said after defending the executive decree in court yesterday.

The government and the opposition yesterday engaged in a verbal tug of war in trying to convince the high court about their points of view on the decree.

The court convened its only session to hear testimony before ruling on the constitutionality of the decree, designed for debt financing worth Bt400 billion, as part of the economic revitalisation package.

Representing the opposition was Pheu Thai MP Surapong Towijakchaikul. Korn testified on behalf of the government.

Testifying for the opposition, Surapong said there was no urgency to justify the government's issue of the decree in lieu of an act of Parliament.

The opposition disagreed with the government about the necessity to increase public debt at this juncture, because the authorities had conceded having other means - rather than borrowing - to overcome the economic downturn, he said.

Since less than 50 per cent of the 2009 budget had been disbursed, the government should have sufficient funds to cover its planned spending and could defer the borrowing - if still deemed necessary - to the end of the fiscal year, he said.

He argued that the true intent of the decree was not to jump-start the economy, but to cover revenue shortfalls, which exacerbated the budget deficit of Bt111 billion.

The debt financing, which the government has claimed would be earmarked for mega-projects, is a pretext for squandering the borrowed funds worth Bt289 billion because all projects will not commence until next year, he said.

The decree, if sanctioned by the judicial review, would spawn a lapse in fiscal discipline, he said.

In concluding his statement, he quoted Korn as saying the government had prepared a number of contingency plans if the decree was to be ruled unconstitutional by the high court.

In defending the decree, Korn said it was the lynchpin of economic revitalisation in light of the higher-than-expected contraction of 7.1 per cent in this year's first quarter.

The economy has been nosediving even though the government has earmarked Bt116 billion in the current budget for overcoming the downturn, he said, pointing out the decree is designed to spur public spending to create 400,000 to 500,000 jobs.

He said the debt financing would speed up spending to fight economic woes, as funds raised through the decree would not be subjected to the restraints imposed by the budgetary regulations.

He said the government needed the special mandate on public debt in order to implement economic measures in a timely manner.

"The economy is deteriorating. How can anyone say this is not an urgent matter?" Korn lamented.

Public investment should contribute to an improvement in economic conditions by year-end, he said.

During the session, 10 red shirts rallied in front of the court building opposing the decree.

The Cabinet early this month approved a second stimulus package worth Bt1.4 trillion. But the government will have to borrow up to Bt800 billion to finance the budget deficit and investments running into 2012.

The government intends to take a shortcut by implementing an executive decree to borrow the first Bt400 billion.

Another Bt400 billion will be raised next year using the normal parliamentary process, by submitting a bill to Parliament.

[davejonesbkk]

A bit unexpected, I thought the banks had been doing ok here?

On what grounds did you think that?

Not sure actually, think I read it her on TV business forum....what you mean its not gospel???

[ilovefashionTV]

A bit unexpected, I thought the banks had been doing ok here?

On what grounds did you think that?

Not sure actually, think I read it her on TV business forum....what you mean its not gospel???

The only truthful thing you read on here is that most of us have a super rich Chinky/Thai wife, we're really well educated thus super rich and never boast of it, were really successful with the fit girls back home and arent really to sure where the gogo bars are.

Theyre probably just short of bonus money for their top end staff as it seems our banks were.

Edited May 27, 2009 by ilovefashionTV

[roamer]

Shamefully copy and pasted from another forum, no links. But no smoke without fire again.

Excuse me ? The header said Bangkok Post but if you want the link here it is:

http://www.bangkokpost.com/business/econom...rst-hit-in-asia

Roamer

[Steve2UK]

Shamefully copy and pasted from another forum, no links. But no smoke without fire again

.

Excuse me ? The header said Bangkok Post but if you want the link here it is:

http://www.bangkokpost.com/business/econom...rst-hit-in-asia

Roamer

Actually that link goes to a different article, but I also was puzzled by neil324's "shamefully" comment - the more so since he quotes a long piece later in his post and cites no source for it whatever - let alone a link.

[roamer]

Shamefully copy and pasted from another forum, no links. But no smoke without fire again

.

Excuse me ? The header said Bangkok Post but if you want the link here it is:

http://www.bangkokpost.com/business/econom...rst-hit-in-asia

Roamer

Actually that link goes to a different article, but I also was puzzled by neil324's "shamefully" comment - the more so since he quotes a long piece later in his post and cites no source for it whatever - let alone a link.

See what you mean about the link though I copied it directly from my IE bar, it was a breaking news story and as I said it clearly stated it was Bangkok Post and gave the dateline. Rather miffed at the "shamefully" accusation, in the circumstances that you pointed out the words pot, kettle & black do come to mind

This is the corrected link.

http://www.bangkokpost.com/breakingnews/14...nks-credibility

Edited May 28, 2009 by roamer

[mommysboy]

The debt problem sounds plausible and the warning must have some substance. No doubt the economy is nosediving. It really looks bad. Can anyone else shed some light.

[roamer]

The debt problem sounds plausible and the warning must have some substance. No doubt the economy is nosediving. It really looks bad. Can anyone else shed some light.

This is an excerpt from a much longer article.

Newswit. Wednesday, 27 May 2009 11:49

"The rating review has been prompted by the severity and longevity of the global economic crisis and the country's political turmoil -- as reflected by Moody's negative credit outlook on the Thai banking system.

Over the next two years, banks are likely to experience higher credit-related write-downs, lower growth and lower revenue, which in turn may pressure the banks' current capitalization levels."

http://www.newswit.com/enews/2009-05-27/8b...42eb096cb83d24/

Should be noted that Moody's has long been somewhat sceptical about exactly how robust the Thai banking system is.