What'S The Best Bank Interest Rate In Thailand?

[TallGuyJohninBKK]

For someone living in Thailand, I'd take the best Thai banks over any US bank at the moment.

Thanks for the info on the government banking policies, I'll take a look at that...

Re your comment above, if you mean in terms of institutional fiscal stability of Thai vs. other banks, I'm not sure on what basis to make such a comparison, or if anyone has done so.

But if you mean the choice of where to keep one's personal money and banking relationships, the U.S. banks have far better consumer protections for their account and cardholders. And if you avoid the mega banks, a lot of local and regional banks have far better (more economical) fee situations compared to their Thai counterparts.

[Naam]

Swap it over and imagine a Thai looking at US banking. Lehmans, Bear Stearns, Citi, dozens of failures each year.

pearls before...................................................................................................................................... ignorants

[Naam]

your comment above, if you mean in terms of institutional fiscal stability of Thai vs. other banks, I'm not sure on what basis to make such a comparison, or if anyone has done so.

the basis is homework, a lot of homework!

[TallGuyJohninBKK]

now putting on my flak jacket and waiting patiently for "incoming"

Don't bother waiting, Naam... No one's paying any attention re your comments anyway...

BTW, as a consumer, I really don't care about the credit ratings of this or that bank, at least not down at the gut level. And the ratings agencies haven't always exactly distinguished themselves on the accuracy/credibility of their banking industry ratings.

What I and most consumers should care about is... if their bank happened to go under, how well would their deposits be protected...

In the U.S., $250,000 per depositor per bank. And a long and established history of the government making good on any such losses.

BTW, I should add, yes there are and have been bank failures in the U.S. each year. And 99% of the time, it's transparent to the account holders. The old bank is closed on a Friday, and the accounts and deposits are transferred and reopened on the following Monday with a new bank chosen by the FDIC that takes over from the failed bank. So there's rarely even a case where the government has to pay out deposit insurance claims directly to accountholders.

In Thailand starting next August, about $33,000 per depositor per bank. And I don't have much idea how farangs would fare in the event they ever had to rely on the Thai government deposits insurance scheme.

For me, it's an easy choice between the two options...not even close.

Edited November 28, 2011 by TallGuyJohninBKK

[fletchsmile]

Thai banks are generally in good shape.

in fact much better than any of the big multinational freaking banks run by notorious banksters. but that does not impress the Farang "anything Thai bashing Brigade" which possesses a wealth of no bloody idea concerning any banks' risk exposures.

now putting on my flak jacket and waiting patiently for "incoming"

Don't you mean "shields up, captain"...

[Naam]

now putting on my flak jacket and waiting patiently for "incoming"

Don't bother waiting, Naam... No one's paying any attention re your comments anyway...

good! then i will take off my flak jacket and have a relaxing nap with my dogs. Europe trading just started. clear trends not available before i had my nap.

[fletchsmile]

For someone living in Thailand, I'd take the best Thai banks over any US bank at the moment.

Thanks for the info on the government banking policies, I'll take a look at that...

Re your comment above, if you mean in terms of institutional fiscal stability of Thai vs. other banks, I'm not sure on what basis to make such a comparison, or if anyone has done so.

In each country the regulators are looking at systemic risk. For the banks themselves risk management and compliance teams look at these teams. A big global bank would be having it's Thai entity look at the risks there. Bank of Thailand (regulator) compare their own practices to those in other countries, even if other countries don't always look at Thailand. They discuss regularly with other regulators.

I can assure you that risk management teams in every single Thai bank have been asking themselves in recent years can the mess that happened over there, happen here? and taking steps. So yes loads of work does go on

As Naam says. It's homework

But if you mean the choice of where to keep one's personal money and banking relationships, the U.S. banks have far better consumer protections for their account and cardholders. And if you avoid the mega banks, a lot of local and regional banks have far better (more economical) fee situations compared to their Thai counterparts.

The problem is there are so many banks to avoid in the US, how does a non-US citizen sort the wheat from the chaf. Of all the dozens banks in US that have gone bust this year, aren't they the local banks? Seems like one can't trust the large ones, and the smaller ones you need to do your homework. Unless you live there or are a US national, I see no reason to touch them. Even if a US national, seems to make sense to me to use other banks outside the US.

[fletchsmile]

List of Bank Failures in US. 90 and counting for 2011 alone

http://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_(2008%E2%80%93present)#List_of_bank_failures_in_2011

List of Thai Bank Failures in 2011: Nil

I prefer to focus on avoiding banks that will fail first and worrying about guarantees second

[TallGuyJohninBKK]

Fletch, my comments were in the context of comparing U.S. vs. Thai banking for an American with easy access to U.S. banking providers.

Of course the smaller U.S. banks outnumber the larger ones just by count. But, if you look at the roster of failed U.S. banks in recent years, they cover the range from tiny tiny institutions to tens of billions of dollar ones...

But I really don't understand your comments about "can't trust the bigger ones" and focus on bank financial stats and credit ratings and such.

I used to be a Bank of America customer... Nowdays, they're in the dumps financially. But if I still had deposits with them, I really wouldn't care, at least in the context of the safety and security of my deposits.

My deposits (up to $250,000 per bank) would all be government insured, and I wouldn't have to worry about losing a dime, pretty much regardless of what might happen with BofA. (of course fees and account terms and customer service are a different matter).

I wouldn't do business now with BofA, because I think they're a bad bank for their customers in various ways, and particularly for their expat customers. But that assessment has nothing to do with any doubts about the safety/security of my deposits with them, or about their financial or credit ratings or any of the other arcane stuff you guys are throwing out.

If BofA goes bust, my deposits with them (up to $250,000) would be insured, period, no doubt, no questions asked. Unfortunately, starting next year, can't say the same for the Thai banks for anything over $33,000.

[TallGuyJohninBKK]

I prefer to focus on avoiding banks that will fail first and worrying about guarantees second

I think you don't really understand how the U.S. bank deposits program works in the real world. I did explain it above. In virtually all those cases, it's transparent and without even the slightest impact on account holders.

I prefer to focus on making sure whatever deposits I have ARE fully insured, and then think about the financial circumstances of particular banks.

BTW, don't get my wrong.. I'm not saying U.S. banks are great... A lot of them are c**p.

But what I am saying is, the U.S. bank deposits program program is the best I know of, and beats Thailand's 2012 and beyond system by a mile.

Edited November 28, 2011 by TallGuyJohninBKK

[TallGuyJohninBKK]

Fletch, I read thru the documents you linked to earlier regarding changes in Thai banking regulations for foreign entities. The documents are all "plan" type documents, so it's hard to know how much of that has translated or will translate into actual policy changes thus far...

But for everyone's info, I thought it would be good to highlight the salient parts:

Existing foreign bank branches and subsidiaries. Existing foreign bank branches would be permitted to request opening of up to 2 additional branches, in accordance with conditions and rules stipulated by the authority.

On the other hand, existing foreign bank branches may also choose to apply for a change in their status and convert to become a subsidiary, where the authority would consider permitting subsidiaries, both newly converted and existing, additional branches and off-premise ATMs to the maximum of 20 branches and 20 off-premise ATMs, in accordance with conditions and rules set by the MOF.

Amongst such rules, would be the requirement for a minimum Tier 1 capital of 10 billion baht, good rating in accordance with the BOT’s rating assessment, and good risk management system.

This measure aims to foster greater competition from existing foreign service providers, while in parallel, fostering level playing-field with Thai commercial banks in the same market, by allowing foreign bank branches a choice between remaining in a branch status or to become subsidiary that is locally incorporated and have greater distributional network.

And also:

Phase 1 (2010 – 2011) would emphasize strengthening and enhancing efficiency of current financial institutions. This would be achieved by promoting mergers, expansion of business scope, reducing system-wide operating cost, facilitating qualified retail banks to upgrade to commercial banks, and increasing the number of branches for foreign bank branches.

Phase 2 (2012 – 2013) would step up competition in the system by gradually relaxing rules and regulations pertaining to business conduct of foreign financial institutions. In this regard, existing foreign bank branches and subsidiaries would be able to apply for new subsidiary status with more branches. Moreover, new service providers would be introduced under a restricted license. These new providers could be Thai, foreign, or in partnership, to bring about necessary expertise that is still lacking locally, to help further enhance efficiency, while helping to fill the gaps in the financial services. The types of financial institutions that fall under this category of licenses might include microfinance, trust banks, investment banks and Islamic banks.

[fletchsmile]

I prefer to focus on avoiding banks that will fail first and worrying about guarantees second

I think you don't really understand how the U.S. bank deposits program works in the real world. I did explain it above. In virtually all those cases, it's transparent and without even the slightest impact on account holders.

I prefer to focus on making sure whatever deposits I have ARE fully insured, and then think about the financial circumstances of particular banks.

BTW, don't get my wrong.. I'm not saying U.S. banks are great... A lot of them are c**p.

But what I am saying is, the U.S. bank deposits program program is the best I know of, and beats Thailand's 2012 and beyond system by a mile.

The points you are missing is that you are applying US experiences and expectations to Thailand.

It comes down to simply: In the US you really need that guarantee. As you say a lot of US banks are crap. A lot of US banks do go bust. A lot of US banks do take risks they can't cope with. Regulation has been hands off and poor. Massive frauds that bring down financial institutions are common.

Now in Thailand and in Asia in the 21st Century, Thai banks are generally in good health. If you can point out on what basis you think the Thai banks are in bad shape, your thinking would have some merit. The argument which most people use is 1997. That simply highlights they don't really understand the difference between the Thai banking sectors in the 20th and 21st centuries, nor Thailand's economy, nor it's governments reserves etc.

Because someone comes from a high default environment like the US they need that comfort. If on the other hand you have a good handle on life here and realise defaults are nowadays very rare you might have a point.

Now if we were talking 1997 you have a point. Life and the Thai banking sector has moved far beyond that, and unlike the US they learnt from it. You have to look at the risks as they stand today, and as they are likely to stand in coming years

Would you buy a Ford motor car based on the comparisons of Ford in 1997 to say Honda in 1997? I hope not. I hope you'd also realise the car itself is first priority and then the warranty second. Buy a quality car and the warranty is a nice to have. Buy a crap car and keep that warranty in a safe and accessible place. You also need to think how much you are paying for the car. No one is suggesting put USD 1mio in a Thai bank. We are talking a couple of million baht.

Another analogy is also letting the tail wag the dog. In this case for the amounts we're paying, the Thai bank is the relative pedigree and the US the mangy street mongrel which you need to have had your vaccinations against in case you get bitten

Edited November 28, 2011 by fletchsmile

[TallGuyJohninBKK]

Fletch, I never said or suggested today's Thai banks are in bad shape... But then again, the common bank customer often won't know or find out their bank is in trouble until it's too late.

I wasn't around back in 1997. But my understanding is a lot of Thais had deposits get into trouble back in those times with various Thai banks. Obviously, some folks didn't know enough to get out of the way of a coming breakdown.

If and/or when the next breakdown in the Thai system comes, if it ever comes, I don't want to be relying on a $33,000 insured deposits limit.

[Ethan79]

hello all - i'm in similar situation as the OP and have went through the major banks website today. Just sharing what I have found which i thought was the best deals in my opinion.

TMB - 2.5%

Thanachart - Ultra saving account 2.5%. Above 1mil it gets to 2.65%

Stanchart - e-Savers 3%, only ibanking / no branch service and interest paid out biannually

Citibank - 0.65% for first 100k, 2.5% for till 2mil, 2.75% for 2mil upwards

TMB/thanchart should be the easiest to set up with widest network.

standchart seems the best but the biannual interest kinda of sucks and no branch service.

For me citibank might be convenient as I have a citi acct back home and might make transfer back home easy or multi currency acct etc possible. Anyone has experience with that?

[udonguy]

BB 3.25% for 7 months

[TallGuyJohninBKK]

For me citibank might be convenient as I have a citi acct back home and might make transfer back home easy or multi currency acct etc possible. Anyone has experience with that?

I'm not a Citibank customer... But from what I recall of past checking on this and posts here, there's little/no advantage to U.S. Citibank customers holding a Thai Citibank account, unless you're in the high deposit CitiGold or higher programs.

As best as I recall, it's only if you're classed at those high levels that Citi U.S. begins to waive their variety of foreign currency and related transaction fees...and makes moving money from one Citi to the other reasonably sensible/economical...

There've been past posts here on Citi customers hoping they could do that kind of thing... and for the most part, finding out it didn't make sense. But perhaps some direct Citi customers here can speak to that.

[hyperdimension]

TMB - 2.5%

The TMB No Fixed Account which you refer to pays interest biannually too:

Interest is calculated every day and paid twice a year, in June and December.

[jcowle]

For my clarification, do I need to open many accounts to keep under the 20k interest paid yearly to avoid paying tax?

I opened a fixed rate account yesterday with Krungsri, I wanted to put in a resonable amount, but was told it would be better for me to open several accounts to avoid tax payments, this just seems a long winded way of doing it, but if it avoids tax then I will do, any advice please.

Regards

JOHN

[mmail2you]

Kasikorn does not charge tax

[Mike45]

All the rates seem to have gone down. BB 2.5% 4 months

[meatboy]

Kasikorn does not charge tax

who told you that?

[Mike45]

For my clarification, do I need to open many accounts to keep under the 20k interest paid yearly to avoid paying tax?

I opened a fixed rate account yesterday with Krungsri, I wanted to put in a resonable amount, but was told it would be better for me to open several accounts to avoid tax payments, this just seems a long winded way of doing it, but if it avoids tax then I will do, any advice please.

Regards

JOHN

I thought all fixed accounts had tax withheld.

[meatboy]

For my clarification, do I need to open many accounts to keep under the 20k interest paid yearly to avoid paying tax?

I opened a fixed rate account yesterday with Krungsri, I wanted to put in a resonable amount, but was told it would be better for me to open several accounts to avoid tax payments, this just seems a long winded way of doing it, but if it avoids tax then I will do, any advice please.

Regards

JOHN

I thought all fixed accounts had tax withheld.

me and wf.have 8fixed accs.between us all are taxed at 15% end of term.between us we can earn aprox.300,000 bht.interest,

tax is deducted but claimed back end of tax yr.

[mccw]

Bangkok bank were showing us something to day.

1st year deposit 300k and receive a payout of 30k

Second year deposit another 300 (so total one 600) and receive another 30k pay out.

Third year deposit another 300k (900total now) and payout 30k

For the next 7 years no more deposits, your total 900k is stuck but you receive a payout of 40k anualy. After the 10years is up the 900 is returned.

There is a life insurance element / cash lump sum paid out incase of account holders death but I didn't have time listen all the details. From an interest point of view I'm thinking to do this and the life cover is not really an issue/ bonus.

[up-country_sinclair]

^ I'd like to know more about this if anyone has details.

[meatboy]

Bangkok bank were showing us something to day.

1st year deposit 300k and receive a payout of 30k

Second year deposit another 300 (so total one 600) and receive another 30k pay out.

Third year deposit another 300k (900total now) and payout 30k

For the next 7 years no more deposits, your total 900k is stuck but you receive a payout of 40k anualy. After the 10years is up the 900 is returned.

There is a life insurance element / cash lump sum paid out incase of account holders death but I didn't have time listen all the details. From an interest point of view I'm thinking to do this and the life cover is not really an issue/ bonus.

i think someone has their sums wrong or is it me?

for the first 3yrs you average 6%,10%=1st,2nd=6%,3=3,3%,4th.yr-10yr=4.4%.

there's goner be a rush to bkkb.

[jbrain]

Bangkok bank were showing us something to day.

1st year deposit 300k and receive a payout of 30k

Second year deposit another 300 (so total one 600) and receive another 30k pay out.

Third year deposit another 300k (900total now) and payout 30k

For the next 7 years no more deposits, your total 900k is stuck but you receive a payout of 40k anualy. After the 10years is up the 900 is returned.

There is a life insurance element / cash lump sum paid out incase of account holders death but I didn't have time listen all the details. From an interest point of view I'm thinking to do this and the life cover is not really an issue/ bonus.

i think someone has their sums wrong or is it me?

for the first 3yrs you average 6%,10%=1st,2nd=6%,3=3,3%,4th.yr-10yr=4.4%.

there's goner be a rush to bkkb.

I suggest you do your calculations one more time and use a calculator this time

[mccw]

Roughly i make it.

First year 10%

Second year 5%

Third year 3.33%

Years 4-10 = 4.45%

I'm going back bkb to look at details properly and most likely set it up tomorrow. I''ll report back and confirm how it is

[fletchsmile]

Bangkok bank were showing us something to day.

1st year deposit 300k and receive a payout of 30k

Second year deposit another 300 (so total one 600) and receive another 30k pay out.

Third year deposit another 300k (900total now) and payout 30k

For the next 7 years no more deposits, your total 900k is stuck but you receive a payout of 40k anualy. After the 10years is up the 900 is returned.

There is a life insurance element / cash lump sum paid out incase of account holders death but I didn't have time listen all the details. From an interest point of view I'm thinking to do this and the life cover is not really an issue/ bonus.

This sounds like a life insurance policy.

So additional good news is that you can potentially get a tax allowance against the first 100k investment, at your marginal rate of tax (up to 37%), and as you say if you die the spouse might get more than "invested".

Things to be very careful of and potential bad include:

- ask what the "cash surrender values" are at the end of each year, in case you need to cash in early for any reason. They may not allow early cash in as you suggest it being "stuck", but they might. These can often be horrendous. Ball park if you assumed the premiums were evenly split over 10 years, you often lose the first year in costs. I know this is only 3 years of premiums but I wouldn't be surpised for you to lose as a crude estimate 10% of (300+300+300) after year 1, say 90k, but it could be better or worse

- get an actual quote for you or your wife specific to you showing the policy values for each of 10 years. If life assurance related the cost of insurance may differ based on age. If it's a flat rate for everyone, then if you're a young guy ask to compare it to a product based on life insurance premiums for your age, it could be you are effectively subsidising older people, or conversely getting a better deal if you're older yourself. Bangkok Bank have about a dozen variations on this type of product.

- understand exactly when payments are made. The way you quote it isn't really the right way to value it for calculating % returns. You want to look at the internal rate of return (IRR),

eg although they say you pay 300k and receive 30k in year one, it could well be you pay 300k at the start of year 1 but receive 30k at the end of year 1. If you then pay at the start of year 2 another 300k, this is much closer to having paid 600k and received 30k! i.e 300k year zero 300k 1 year later and receive 30k 1 year later, which you could think of as getting your first 30k out of your second installement!

- You might actually be better thinking of it paying 300k year 1, paying 270k year 2, paying 270k year 3 (i.e netting of the 30k amounts) then only getting the 40k income per year later and 900k at the end. Does that still sound as appealing? They dress these products up to sound nice that you're getting "income", when some people might argue you're just getting a premium discount or refund of some of your capital for your first 3 "receipts".... This dressing up and lack of transparency around life assurance costs are reasons to be wary.

-Check if you do get 6 or 7 payments of 40k, i.e in last year you get your 900k or 900k + 40k

- Looks like it pays an IRR of something over 4.X%, but not clear without knowing the timing of each cashflow.

Read the small print on these. Then also ask yourself:

- is it worth the inflexibility of being tied up for 10 years to get a bit higher interest rate? For some people it might be

- how would you feel if say 3 years from now rates start rising above this level, and you're stuck in at that rate?

Fletch

Edited February 18, 2013 by fletchsmile

[fletchsmile]

Roughly i make it.

First year 10%

Second year 5%

Third year 3.33%

Years 4-10 = 4.45%

I'm going back bkb to look at details properly and most likely set it up tomorrow. I''ll report back and confirm how it is

See my post above, if you pay the 300k at the start of the year and the 30k is received at the end, they have succeeding in dressing this up and misleading you.

Simplifying and putting in layman's terms: More accurately if this is the case you have paid 300k day 1, then 270k net day 365/6, then another 270k net day 730/731.You need to look at the cashflows and timings. One could argue all they might be doing is giving you some of your own capital back/ reducing your premiums. It's only after year 3 onwards you're getting net receipts instead of making net payments. Think about that for a moment...

Then ask yourself when do you really get those additional 30ks? In reality is it more like:

Time 0: Pay 300

Time 1yr: Net Pay 270

Time 2yr: Net Pay 270

Time 3yr: Net receive 30k

Time 4-10: Net Receive 40k

Time 10: Net receive 900k

Under the insurance policy you are committed to adding more money for a net payment after the first and second years.

This is different to a bank account where you could take your money out after one year (without a penalty) and/or choose what happens next, and whether you add to it or not

Effectively the 30k in the early years just goes towards your next premium. You don't have 30k in your pocket to spend, you have 270k to find and pay!

Hence an IRR method is more appropriate, and you should be looking at the rate over 10 years not the individual years, which are deliberately set up with headline %s that look nice until you consider the real cashflow profile.

Fletch

Edited February 18, 2013 by fletchsmile