Why Do Thai Banks Have Such Low Interest Rates?

[neverdie]

Anyway, I can assure you theres plenty of places to park you're at call money in Oz for rates better than that 4.85% you are dancing on.

i am not dancing on 4.85% but quote as a fact that this is the AUD interbank rate. and if somebody tells me that a bank is handing out 6.xx% to depositors even though it can borrow from other sources cheaper then logic dictates there is something fishy. and as far as financial institutions are concerned dozens of fishy possibilities exist. going into details is too time consuming and most probably of no interest to the participants here.

You call something 'fishy' if its an introduction rate or if there is a cap or another condition. I don't.

Also, relative short term deposits in Oz attract rates of 6.2% for six months (just did one of them the other day) and 6.4% for 12 months & if you want to go slightly longer term than that you can easily get over 7%. Many of the banks also offer above advertised rates once you get over a certain amount of cash. It was only a few weeks ago that I locked away one for 8.25% (NO B.S) although the term for that one was 5 years and I'm not sure if that was such a wise move given the present state of affairs.

Anyway, someone else raised this issue of the Aussie banks, not me & if I had a heap of thai funds I'm fairly sure I wouldnt convert them to Aussie dollars & be placing them in term or at call deposits. Its easy to see how quickly the Aussie can fluctuate & the only reason I have cash there is I am from there & dont desire to bring it here. Capiche?

[neverdie]

No Naam, what I am talking about is 'at call' cash savings and 'e' accounts in Australian Banks.

i am well aware of that ND and commented already. shall i read it aloud for you?

No mate, we were posting at the same time.

[rixalex]

You call something 'fishy' if its an introduction rate or if there is a cap or another condition. I don't.

Do you call something fishy if it makes you itch?

[wester]

The best way to understand this is "Now the world is divided into Savers and Speculators". The Speculators are ascendant. They need to borrow money at low interest rates to fuel investment bubbles around the world (like Australia with its 4.5% rate). Never mind if they make a mistake. Governments have already proven that they will bail out any amount of speculative gambling debts.

Savers, like your old mom who just wants to enjoy her retirement on her small pension are being hammered 6 ways from Tuesday.

There are no Dems/Reps, Torries/Labor, Red SHirt/Yellow --- there are only savers and speculators and right now the gamblers are running the casino. Until you, your old mom and half the people on the planet grow a pair, not much is gonna change. Make your bets accordingly.

Today's price of gold: $1261 per ounce

Have a nice day

[Naam]

Anyway, someone else raised this issue of the Aussie banks, not me & if I had a heap of thai funds I'm fairly sure I wouldnt convert them to Aussie dollars & be placing them in term or at call deposits. Its easy to see how quickly the Aussie can fluctuate & the only reason I have cash there is I am from there & dont desire to bring it here. Capiche?

a valid reason although call deposits are not a problem as one can convert them within the blink of an eye into another currency. personally i like the big fluctuations of AUD as well as NZD. no fluctuation = boring and no profit, big fluctuations = big profit (if positioned accordingly).

question: are your cash AUD taxed although you are not an Oz resident?

[Naam]

Anyway, I can assure you theres plenty of places to park you're at call money in Oz for rates better than that 4.85% you are dancing on.

i am not dancing on 4.85% but quote as a fact that this is the AUD interbank rate. and if somebody tells me that a bank is handing out 6.xx% to depositors even though it can borrow from other sources cheaper then logic dictates there is something fishy. and as far as financial institutions are concerned dozens of fishy possibilities exist. going into details is too time consuming and most probably of no interest to the participants here.

You call something 'fishy' if its an introduction rate or if there is a cap or another condition. I don't.

please read again what i wrote.

[neverdie]

Anyway, someone else raised this issue of the Aussie banks, not me & if I had a heap of thai funds I'm fairly sure I wouldnt convert them to Aussie dollars & be placing them in term or at call deposits. Its easy to see how quickly the Aussie can fluctuate & the only reason I have cash there is I am from there & dont desire to bring it here. Capiche?

a valid reason although call deposits are not a problem as one can convert them within the blink of an eye into another currency. personally i like the big fluctuations of AUD as well as NZD. no fluctuation = boring and no profit, big fluctuations = big profit (if positioned accordingly).

question: are your cash AUD taxed although you are not an Oz resident?

Yes, I understand that. Regarding you're taxation question. Non-residents of Australia pay 10% with-holding tax, Australians pay tax on savings interest the same rates as income. The krudd governement was talking about halving tax rates for the first $1000 dollars interest earn by Ozzie residents (not that Im too sure what that will acheive ).

But you already knew all of that didnt you Naam. Now you are going to refer me to bank interest rates in New Zealand or Hong Kong or somethin?

WESTER, I'm wasnt exactly sure of what you were referring to about the Australian Cash rate of 4.5%. You are aware that is a very average rate for the Ozzies, over say the last 20 odd years?

[neverdie]

Anyway, I can assure you theres plenty of places to park you're at call money in Oz for rates better than that 4.85% you are dancing on.

i am not dancing on 4.85% but quote as a fact that this is the AUD interbank rate. and if somebody tells me that a bank is handing out 6.xx% to depositors even though it can borrow from other sources cheaper then logic dictates there is something fishy. and as far as financial institutions are concerned dozens of fishy possibilities exist. going into details is too time consuming and most probably of no interest to the participants here.

You call something 'fishy' if its an introduction rate or if there is a cap or another condition. I don't.

please read again what i wrote.

I did. I am sure there is more their actions than meets the eye, however if you are trying to suggest something about the reasons you think they are doing that, you should just spit it out and stop beating around the bush.

There was no secret made that the big 4 Australian banks & a few smaller ones intended to target their retail domestic customers to attract deposits as opposed to borrowing overseas & the 'other' associated costs and risks involved with that.

Anyway, I'm sure you have something to say about it.

[chuang]

Well why not park your money in Vietnam banks.....some pay as much as 10% yearly...

[sha1985]

I leave my money in a Savings Account in Australia. I have half in an online account at 6.15% and the rest in a Term Deposit at 7.5% with the monthly interest redirected to the online account. Then I just transfer funds online to my thai account when needed, $22 to transfer and it usually clears in 48 hours.

you better check your online rate and report back again. there is no bank in Australia which pays 6.15% on short term cash when it can refinance at 4.85% interbank rate.

RUBBISH Naam. Rabo plus and a couple of others have been offering 6.15% for in excess of a month now. Theres a few others around 6% as well.

RUBBISH ND! 6.15% for what fixed term? definitely not for a savings account with immediate online access to the cash (as mentioned above).

note to my[not so]humble self: "it is unwise to discuss quantum mechanics with your gardener!"

might be worth you checking some websites before making statements like the above. Check www.Ubank.com.au so long as I make a minimum dept each month (which is why I redirect the interest from my TD to this account) I am actually now earning 6.26% with no fixed term at all. If I dont make the minimum I still get 5.85% and there are no penalties for withdrawals. I also work for another Australian Bank which is currently offering 6.00 if no withdrawals.

[Naam]

There was no secret made that the big 4 Australian banks & a few smaller ones intended to target their retail domestic customers to attract deposits as opposed to borrowing overseas & the 'other' associated costs and risks involved with that.

Anyway, I'm sure you have something to say about it.

of course i have to say something, namely that australian banks do not have to go overseas to borrow or refinance because they can use the RBA which does not involve any risks.

RBA: Cash Rate Target

in the meantime a banker friend of mine who reads Thaivisa phoned me from Singapore and asked me whether i am really not aware that the attractive rates are meant to attract a great number of depositors with a certain percentage of suckers to whom they can sell various own investment vehicles on which they make money and can easily bear the difference between RBA rates and the rates they are paying.

[neverdie]

^No doubt Naam, no doubt.

Also never forget that theres still people signing up for home loans at 8% in Oz & that the property there is only starting to cool in some places (depending on what level of property you own). So if you have a hundred billion AUD of loans at 7.8% & you're only paying around the 6% mark or less to the depositor, then you are making the 1.8% minus tax (30%), still leaves a profit of 1.2% (very roughly.....I know these are SIMPLE FIGURES) & don't worry about admin costs because most Aussie banks still charge loan set up fees, account fees, this fee that fee, hence the reason they are turning over MASSIVE PROFITS & You hit the nail on the head with what you mentioned above.

Also this week the Australian Govt announced that the Big 4 banks of Oz are making X amount of millions extra out of peoples $$$ because not all savers are that savy & many having amounts of cash in accounts only paying one or two percent. NOT EVERYONE IS AS TIGHT AS ME.

Anyway, banking in Oz is a completely different game (within reason) and its been quite some time since an Aussie Bank/Building Society or Credit Union went arse up (I think Pyramid Building Society was the last) in 1990. From memory when they went arse up the Victorian State Govt created a new tax to cover the losses (govt bailing out bad business), but Oz is nothing like the maize of banks the USA/Europe has.

Also Australians really havent suffered a problem with property yet, either & some sectors of the property market are still booming, some would argue property is over valued in Oz. Others will argue that the demand outstrips supply & you know what happens when that happens.

Anyway, I didnt know Vietnam has 10% interest rates and I still dont understand exactly what point Mr wester is making about the Oz Official cash rate of 4.5%.

[neverdie]

PS Naam: I thought it would be worthy to mention to you that I have for quite a number of years now always been able to secure medium term deposits at roughly between 1.5-2% higher than the official RBA cash rate, for example I have a couple that are still going since mid 2008 @ 8.4%, which was rather nice stuff to hold thru the rocky times when little ametuer investors like me didnt know which way was up & needed to park their cash somewhere secure with a govt backing :D .

[12DrinkMore]

Also never forget that theres still people signing up for home loans at 8% in Oz & that the property there is only starting to cool in some places (depending on what level of property you own). So if you have a hundred billion AUD of loans at 7.8% & you're only paying around the 6% mark or less to the depositor, then you are making the 1.8% minus tax (30%), still leaves a profit of 1.2% (very roughly.....I know these are SIMPLE FIGURES) & don't worry about admin costs because most Aussie banks still charge loan set up fees, account fees, this fee that fee, hence the reason they are turning over MASSIVE PROFITS & You hit the nail on the head with what you mentioned above.

You need to get acquainted with the wonderful Fractional Reserve System that banks operate.

The banks would not even bother to open their doors on the system you mention. just making a tiddly squit between depositors and debtors.

But using your figures and Fractional reserve Banking, the banks pay a depositor 6%, but then lend out maybe TEN times what the depositor has paid in through the fractional reserve magic and so make around 78% less 6% paid to the combined depositor, so a very reasonable, from the bank's perspective of 72% return on YOUR money, not having invested a SINGLE Dollar in this tidy little arrangement.

Surely you did not think that all those banks branches, massive head offices, humongous salaries were paid for out of the difference between the deposit and lending rates?

And, (this is even more incredible), apparently the large "arrangement fees" charged to YOU by the banks, say GBP 1,500, is subsequently used by the banks to enable them to lend to YOU another 15,000 Quid by a similar mechanism. So basically you give them 1,500 Quid and then they make say 900 Quid/year on that.

I hate the <deleted> banks.

Edited June 19, 2010 by 12DrinkMore

[Naam]

PS Naam: I thought it would be worthy to mention to you that I have for quite a number of years now always been able to secure medium term deposits at roughly between 1.5-2% higher than the official RBA cash rate, for example I have a couple that are still going since mid 2008 @ 8.4%, which was rather nice stuff to hold thru the rocky times when little ametuer investors like me didnt know which way was up & needed to park their cash somewhere secure with a govt backing :D .

quite interesting ND! but i still wonder why in Oz things are (in this respect) upside down. could it be because the sun shines from the north as opposed to what we from the northern hemisphere are used too?

i can easily accept that rates for term deposits are higher than RBA rates. inspite of the explanation i got yesterday the high rates for call money in Oz surprise me. on X00k AUD call i am getting presently (after hard negotiations) interbank minus 0.25%, i.e. just a wee bit above 4.50%. my only advantage is that i have round the clock access and can convert AUD into any unrestricted currency with a few keystrokes and mouse clicks plus i can issue stop loss and buy orders.

[neverdie]

Also never forget that theres still people signing up for home loans at 8% in Oz & that the property there is only starting to cool in some places (depending on what level of property you own). So if you have a hundred billion AUD of loans at 7.8% & you're only paying around the 6% mark or less to the depositor, then you are making the 1.8% minus tax (30%), still leaves a profit of 1.2% (very roughly.....I know these are SIMPLE FIGURES) & don't worry about admin costs because most Aussie banks still charge loan set up fees, account fees, this fee that fee, hence the reason they are turning over MASSIVE PROFITS & You hit the nail on the head with what you mentioned above.

The banks would not even bother to open their doors on the system you mention. just making a tiddly squit between depositors and debtors.

But using your figures and Fractional reserve Banking, the banks pay a depositor 6%, but then lend out maybe TEN times what the depositor has paid in through the fractional reserve magic and so make around 78% less 6% paid to the combined depositor, so a very reasonable, from the bank's perspective of 72% return on YOUR money, not having invested a SINGLE Dollar in this tidy little arrangement.

On ur first quoted point, i would be surprised by that.

Second quoted point, I understand that but was trying to look at the most simplistic view of it all. I am sure some of the stuff they get up to would shock me & others, but again Ozzie banks are much more regulated than their US & Euro buddies.

[Lost in LOS]

Nope above 6.15% (see my latest post) for Savings account, cash on call. I thought my account was 6%, but the internet is telling me 6.2%.

If you want to check out some aussie rates Naam, I'll make it easy for you:- ratecity.com.au

ps: Naam I would happily be you're gardner.

the usual bankster tricks ND. Rabo has a cap of AUD 50k, ING and Westpac state "promotional rate 4 months"...

p.s. my gardener is indeed happy. he is allowed to have sex with our maid.

where does your chauffeur figure in all this?

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pps. our maid is his wife!

[12DrinkMore]

On ur first quoted point, i would be surprised by that.

Take a largish depositor with 100,000 in his deposit account, he gets paid AUD 6,000 to keep it there, the combined banks using his deposit ramp this up to magic AUD1,000,000 and make AUD 72,000. If they could only make the difference between deposit and lending rates, then their profit would be just AUD 1,800, reducing their total profits to just 2.5% of what they had before. That ain't gonna pay for much in the way of salaries and bonuses. I don't believe any bank could operate like that.

I wonder about the Islamic banks, which are not supposed to charge interest. Although they do, but it is wrapped up in fancy paper and called something else like "custard cream pie" and gets the nod by some big wig from the mosque, who takes a bike of the pie for the blessing. Presumably they also work using Fractional Reserves to ramp up the custard cream pie production.

I believe that the remaining mutual building societies still operate on the basis of the difference between deposit and lending rates, but you don't hear anything about multi million bonus packages, or see high profile mega-offices.

Second quoted point, I understand that but was trying to look at the most simplistic view of it all. I am sure some of the stuff they get up to would shock me & others, but again Ozzie banks are much more regulated than their US & Euro buddies.

I think it is important to inform the general public, who mostly haven't a clue, about the banking system. After all, is was the banks' lending practices which have brought the western economies to their knees.

Your post reinforced the common notion that banks earn money only on the difference between deposit and lending rates, similar to a shopkeeper with his buying and selling prices. I am on a mission to dispel this notion, so that the peeps know what we are bailing out.

[neverdie]

12, I appreciate what you are saying & of course I do understand that the banks use many methods for leveraging their money to acheive maxium bonues, but to what portion of what equals what I have no idea^& have never been involved in the Industry (which the exception of placing my cash funds in the account of course).

Some people are anti-banks and probably have good reasons for being so, but compound interest has always been something that amuses me & would be quite powerful if it was for the draconian tax regimes.

Edited June 20, 2010 by neverdie

[Livinginexile]

I have 2.8 % interest in my bank back in my home country Norway , not bad

I get 6% on my daily account back home and a few weeks ago got a fixed term at 8.25%, in my home country but its not going to help anyone with thai baht.

In Australia I get 4%!

[bangon04]

I saw an advert for one of the thai banks, think bkk bank the other day and they were offering up to 5 or 6% if you left the funds in a certain account for over 37 months. I just cant remember the details now - old age, it must be really hard for poor ole Naam.

The Thai banks offer a "STEP" rate. So you will probably find that the 5% rate only applies to the 37th month, while the first 36 months are a much lower rate of interest. And remember to deduct 15% withholding tax from your interest.

It seems that the Thai banks rely on the benefits of Thai education - ie - the average customer is unable to use a calculator.

Let HSBC have free reign in Thailand for just 6 months - there won't be any Thai banks left .

Note that Siam City will be closing down soon - converting to Thanachart. (it seems you-know-who is liquidating their assets)

[Khun Jean]

You amateurs. Even my Thai neighbor gets more than that. What about 10% a month!.

Little more risk than others but if spread out it works out pretty well, looking at his Mercedes he bought last week with cash money.

When in Rome...

:)

[Chunky1]

Thailand is a bubble waiting to happen in 2011 with the speculation that is going on and the BoT sitting around oblivious w/ a 1.75% interest rate in this environment. The government listed inflation rate (reality it is much higher) is 3.5%.

[Naam]

Thailand is a bubble waiting to happen in 2011 with the speculation that is going on and the BoT sitting around oblivious w/ a 1.75% interest rate in this environment. The government listed inflation rate (reality it is much higher) is 3.5%.

what exactly are you trying to tell us?

[Chunky1]

sell your condo when it goes up 35% next year

Edited November 7, 2010 by Chunky1