Foreign Banks Given Greater Presence In Thailand

[webfact]

BANKING

Foreign banks given greater presence in Thailand

Seetalavajit Sabayjai

The Nation

The Bank of Thailand announced a historic move Thursday, allowing foreign bank branches to upgrade themselves and operate up to 20 branches nationwide.

It marked the first time that foreign banks can set up subsidiaries in Thailand. So far, they have been allowed to operate as branches and their presence is limited to one branch per bank.

Such move is a part of the second phase in the Financial Sector Master Plan, jointly drawn by the Ministry of Finance and the central bank, according to Thongurai Limpiti, an assistant governor.

Under the new rule, foreign banks can operate upto 20 branches and 20 off-premise ATMs.

The MOF has approved the move which takes effect today, Thongurai said.

Foreign banks have long sought for the permission, which came when banks in Europe are concentrating operations at home in light of debt crisis.

-- The Nation 2011-12-15

[laocowboy2]

Welcome news - if a long time in coming.

While 20 branches is clearly not enough for a retail banking model, it will be fine for corporate banking, trade finance and (possibly) wealth management. perhaps the ATMs will persuade the Thai banks to roll back their rapacous fee structure for the use of foreign cards in local ATMs.

[theblether]

Excellent news.......you would imagine any foreign bank wanting to take up the 20 branch allocation would concentrate a few in BKK and spread the rest out to places such as Pattaya, Chiang Mai, Phuket etc They're more likely to go where they have a market waiting for them.

The question is..........who has the balls to expand in the current climate?

[Pib]

Being allowed to have 20 branches nationwide ain't bad "but only 20 ATMs" nationwide!? I'm assuming they mean 20 ATMs nationwide versus 20 ATMs per branch. Only being allowed 20 ATMs really hurts any bank trying to focus on retail customers since Thais (and farangs) heavily depend on ATM access/usage.

[ThaiLife]

Now HSBC Pattaya Branch sounds Good

[webfact]

BOT

New regulations nod to foreign bank expansion

SEETALAVAJIT SABAYJAI

THE NATION

The Bank of Thailand said it was not worried about possible impacts from the euro-zone debt crisis on Thailand's second phase of the Financial Sector Master Plan, which includes permission for upgrading foreign banks with a branch in the country into a subsidiary.

The central bank yesterday announced guidelines permitting foreign banks currently operating a branch in Thailand to become a subsidiary that can have a maximum of 20 branches and 20 off-premise ATMs across the country. The Ministry of Finance approved the notification, which also took effect yesterday.

"We do not set a target on how many [branches will apply to be a subsidiary]. We open an opportunity for them to set footprint in Thailand. Even more, we focus on those with strong financial status," said Tongurai Limpiti, the central bank's assistant governor.

FOOTHOLD

The policy aims to increase competition and enhance the efficiency of Thailand's financial system while allowing foreign bank branches to get a foothold in Thailand before the Asean Economic Community materialises in 2015, she said.

"Whoever comes first will gain an opportunity to do business first," she said.

Currently, there are 15 foreign bank branches and one subsidiary of a foreign bank in Thailand. Of these, five are European banks, three are US banks, and three Japanese. Most foreign bank branches provide wholesale services to corporate customers.

"This move could benefit investors who invest in Thailand. It will increase channels for financial services [of foreign banks] to customers. Foreign banks could serve their customers wherever it is close to them, instead of only in Bangkok," Tongurai said.

Based on the guideline, the applicant must be a foreign bank that already has a branch in Thailand, has a strong financial standing with good operating performance and has expertise in international finance, Tongurai said.

The branch must maintain capital adequacy ratio of no less than 12 per cent and non-performing loans must not exceed 3.5 per cent. It must also have a good rating under the BOT's rating assessment and have a good risk-management system.

Upon commencement of the operation, the subsidiary must have paid-up capital of no less than Bt10 billion.

The applicant must be a foreign bank that is licensed in a country that already has, or has the potential to have, good relations with Thailand in the areas of finance, trade and investment.

It is expected to take no more than five months for the central bank to complete the review process of the application, which can be submitted between January 4, 2012 and December 28, 2012, Tongurai said. Operations can commence within one year after approval.

-- The Nation 2011-12-16

[kennalder]

Welcome news - if a long time in coming.

While 20 branches is clearly not enough for a retail banking model, it will be fine for corporate banking, trade finance and (possibly) wealth management. perhaps the ATMs will persuade the Thai banks to roll back their rapacous fee structure for the use of foreign cards in local ATMs.

Don't count (no pun intended) on it, rolling back fees that is. You've heard the joke: What's a farang talking about when he says "Mine is different" his pit bull or his Thai g/f. You can probably add bank to the list of possible answers.

No banker is your friend. Any favor they seem to be doing for you has a motive behind it, and it ain't in your best interest (pun intended).

[alant]

Welcome news - if a long time in coming.

While 20 branches is clearly not enough for a retail banking model, it will be fine for corporate banking, trade finance and (possibly) wealth management. perhaps the ATMs will persuade the Thai banks to roll back their rapacous fee structure for the use of foreign cards in local ATMs.

agree welcome news but as a point of interest, Bangkok bank atm's have been stating free use for foreign cards for a while now.

[thurien]

Now HSBC Pattaya Branch sounds Good

Naye - Pattaya is to abound with Russian bank branches for the posh & wealthy vodka guzzlers ... not for British

low-pension schemers!

[rotary]

While they are changing bank rules can they do something about the stupid rules and regulations for US$ accounts in Thailand? They are just about useless the way it is now.

[crazykopite]

HSBC Samui ! Cool !!!!

Now HSBC Pattaya Branch sounds Good

[meatboy]

could this be just what the farang ordered,and maybe some farang trained staff

[fletchsmile]

Being allowed to have 20 branches nationwide ain't bad "but only 20 ATMs" nationwide!? I'm assuming they mean 20 ATMs nationwide versus 20 ATMs per branch. Only being allowed 20 ATMs really hurts any bank trying to focus on retail customers since Thais (and farangs) heavily depend on ATM access/usage.

It's 20 ATMs total, outside their own premises.

What you may find is that foreign banks might increasingly combine together for free transactions within their own group.

Also likely that more foreign banks might start to absorb the cost for using another bank's ATM generally including Thai banks ATMs. Some foreign banks already do this already, so won't really change much.

Many banks currently allow about 4 free transactions per month in other bank's ATMs anyway

[PattayaParent]

Welcome news - if a long time in coming.

While 20 branches is clearly not enough for a retail banking model, it will be fine for corporate banking, trade finance and (possibly) wealth management. perhaps the ATMs will persuade the Thai banks to roll back their rapacous fee structure for the use of foreign cards in local ATMs.

If the foreign banks don't charge the withdrawal fee you can be sure tehre will be complaints from the local banks and they will soon be forced to adopt it.

[mikebell]

BOT

New regulations nod to foreign bank expansion

SEETALAVAJIT SABAYJAI

THE NATION

The Bank of Thailand said it was not worried about possible impacts from the euro-zone debt crisis on Thailand's second phase of the Financial Sector Master Plan, which includes permission for upgrading foreign banks with a branch in the country into a subsidiary.

The central bank yesterday announced guidelines permitting foreign banks currently operating a branch in Thailand to become a subsidiary that can have a maximum of 20 branches and 20 off-premise ATMs across the country. The Ministry of Finance approved the notification, which also took effect yesterday.

"We do not set a target on how many [branches will apply to be a subsidiary]. We open an opportunity for them to set footprint in Thailand. Even more, we focus on those with strong financial status," said Tongurai Limpiti, the central bank's assistant governor.

FOOTHOLD

The policy aims to increase competition and enhance the efficiency of Thailand's financial system while allowing foreign bank branches to get a foothold in Thailand before the Asean Economic Community materialises in 2015, she said.

"Whoever comes first will gain an opportunity to do business first," she said.

Currently, there are 15 foreign bank branches and one subsidiary of a foreign bank in Thailand. Of these, five are European banks, three are US banks, and three Japanese. Most foreign bank branches provide wholesale services to corporate customers.

"This move could benefit investors who invest in Thailand. It will increase channels for financial services [of foreign banks] to customers. Foreign banks could serve their customers wherever it is close to them, instead of only in Bangkok," Tongurai said.

Based on the guideline, the applicant must be a foreign bank that already has a branch in Thailand, has a strong financial standing with good operating performance and has expertise in international finance, Tongurai said.

The branch must maintain capital adequacy ratio of no less than 12 per cent and non-performing loans must not exceed 3.5 per cent. It must also have a good rating under the BOT's rating assessment and have a good risk-management system.

Upon commencement of the operation, the subsidiary must have paid-up capital of no less than Bt10 billion.

The applicant must be a foreign bank that is licensed in a country that already has, or has the potential to have, good relations with Thailand in the areas of finance, trade and investment.

It is expected to take no more than five months for the central bank to complete the review process of the application, which can be submitted between January 4, 2012 and December 28, 2012, Tongurai said. Operations can commence within one year after approval.

-- The Nation 2011-12-16

British and European banks in Thailand Run for your lives - the Thai economy is doomed!!!

[fletchsmile]

British and European banks in Thailand Run for your lives - the Thai economy is doomed!!!

and where should they run too?

Britain and Europe look in worse shape than Thailand at the moment...

[thaigold]

Welcome news - if a long time in coming.

While 20 branches is clearly not enough for a retail banking model, it will be fine for corporate banking, trade finance and (possibly) wealth management. perhaps the ATMs will persuade the Thai banks to roll back their rapacous fee structure for the use of foreign cards in local ATMs.

150 baht is not excessive. The Thai bank charges 150 baht for the convenience. My Hawaii bank whacks me $5.00 plus an international transfer fee.

[agudbuk]

Welcome news - if a long time in coming.

While 20 branches is clearly not enough for a retail banking model, it will be fine for corporate banking, trade finance and (possibly) wealth management. perhaps the ATMs will persuade the Thai banks to roll back their rapacous fee structure for the use of foreign cards in local ATMs.

150 baht is not excessive. The Thai bank charges 150 baht for the convenience. My Hawaii bank whacks me $5.00 plus an international transfer fee.

I've gone back to using travelers cheques for most exchange transactions.

No charges from my home bank

Generally better exchange rates when cashing them

Paying lower commission rates to the exchanger

[HerbalEd]

British and European banks in Thailand Run for your lives - the Thai economy is doomed!!!

Right now, in spite of the recent floods, the Thai economy is healthier than British, European and USA economy.

[thaiedward]

British and European banks in Thailand Run for your lives - the Thai economy is doomed!!!

and where should they run too?

Britain and Europe look in worse shape than Thailand at the moment...

Right you are, sir.

And let's not forget about the Home of the Free (etc). Right now, the US$ is relatively strong (versus the Euro, at least) but problems within both the EU and the US are worsening...some think it's a deliberate-decline.

Nonetheless, Singapore is steadily becoming the new Switzerland as Asia and other emerging-markets focus on the development of their own middle-class consumers.

And if anyone runs, will they be able to find a direction or will they realize one of their feet has been nailed to the floor?

[TallGuyJohninBKK]

agree welcome news but as a point of interest, Bangkok bank atm's have been stating free use for foreign cards for a while now.

Not sure what you're referring to re BKK Bank...

They've long charged the same 150 baht fee for foreign bank card ATM withdrawals as all the other Thai retail banks... And I haven't heard anything about BKK Bank or the other Thai banks changing their policy/practice on that.

Also, to a couple posters above, there are various U.S. banking options that don't charge any foreign currency fee for transactions abroad, like Capital One, Schwab Bank and State Farm Bank.

And there are a few that even reimburse the Thai banks ATM fees..like Schwab and State Farm.

There's no reason to be paying those fees, unless you choose to.

Edited December 17, 2011 by TallGuyJohninBKK

[12DrinkMore]

While they are changing bank rules can they do something about the stupid rules and regulations for US$ accounts in Thailand? They are just about useless the way it is now.

What are you moaning about?

You can open and operate a USD account very easily. But no interest and higher charges.

This is Thailand not the Great US of A.

And if you can't open an account because you are from the US, well, go and vote for somebody else who is not on the "all US citizens must pay their tax" side.

Good luck.

Edited December 17, 2011 by 12DrinkMore

[12DrinkMore]

Somehow I don't think that the ability to open branches and operate ATM's will result in any reduction in fees that you pay the banks.

There seems to be a total misconception that the foreign banks will come here to provide a cheap service to foreigners.

I would not bet on this.

They are here to make a profit out of YOU.

Edited December 17, 2011 by 12DrinkMore

[TallGuyJohninBKK]

I think there's likely some truth to what 1-2 says above...

HSBC is here already, and they're charging the 150 baht fee on foreign card ATM withdrawals, as best I recollect.... And their Thailand credit cards charge 20% APR interest same as all the regular Thai banks.

And if BofA were to open branches here, which I doubt will happen, they'd probably be even worse than a lot of the Thai banks....which would take some work... But BofA is more than capable at excelling at lousy service and lousy value to its customers.

The Thais definitely aren't looking to remake or reshape their banking sector, regardless of what you may think of it good or bad. At best, they're just looking to meet some international obligations and nibble around the edges without changing the fundamental banking picture here.

[fletchsmile]

...

FOOTHOLD

The policy aims to increase competition and enhance the efficiency of Thailand's financial system while allowing foreign bank branches to get a foothold in Thailand before the Asean Economic Community materialises in 2015, she said.

"Whoever comes first will gain an opportunity to do business first," she said.

Currently, there are 15 foreign bank branches and one subsidiary of a foreign bank in Thailand. Of these, five are European banks, three are US banks, and three Japanese. Most foreign bank branches provide wholesale services to corporate customers.

"This move could benefit investors who invest in Thailand. It will increase channels for financial services [of foreign banks] to customers. Foreign banks could serve their customers wherever it is close to them, instead of only in Bangkok," Tongurai said.

....

As above, the main interest of foreign banks will be wholesale banking and corporate customers.

For some foreign banks there may be a bit more interest in retail customers like people on this forum. This will be mainly be the priority and private banking segments and wealth management - that's to say those with a bit more money.

Otherwise for the mass market retail, it's a joke to say whoever comes first will gain the opportunity to do business first. The fact is the Thai banks are effectively here first, and have been protected so long they will generally do business first in this segment. Banks like BBL, SCB, Kasikorn, BAY, TMB already have hundreds of branches and ATMS. So it becomes just a foothold.

There is too much catch up to do for a foreign bank to compete in mass market retail. Building a retail network organically will take years for them to even to start to compete. So mass market retail makes no sense without an acquisition of an existing Thai bank.

Somehow I don't think that the ability to open branches and operate ATM's will result in any reduction in fees that you pay the banks.

There seems to be a total misconception that the foreign banks will come here to provide a cheap service to foreigners.

I would not bet on this.

...

I'd agree. For the mass market retail, you're not going to see a great impact, as the foreign banks are too far behind to want to play catch up. No way they'll come just to provide cheap service to foreigners. ATMs cost money to run, and unless you are playing a large volume gain, aren't necessarily cost effective.

For those with money in retail premium banking ($100k up) and private banking ($1mio up) they could see a reduction in fees, thru increased competition, and rolling out of products that exist in other countries, as they extend their networks to better serve global clients locally here in Thailand. These would be the main initial foreign beneficiaries.

Banks don't really care about the THB 150 fee on foreign cards. This is mainly targeted at tourists, and why not. The type of quality tourist that's wanted doesn't worry about 5 bucks a few times in a couple of weeks. If you live here the expectation is you open a Thai bank account. The Thai population segment is most of interest to them, then premium foreigners. Mass market retail for foreigners isn't worth it in their eyes.

There is a small amount to be made off mass market retail accounts for foreigners, but funnily enough that's mainly fees on transactions, rather than relationship balances. Things like charges, fees on FX, ATMS etc

Edited December 18, 2011 by fletchsmile

[fire and ice]

I've gone back to using travelers cheques for most exchange transactions.

No charges from my home bank

Generally better exchange rates when cashing them

Paying lower commission rates to the exchanger

I hope you get your own currency travellers cheques (eg: USD GBP EUR etc)?

Only a fool would change into Baht outside of Thailand as the exchange rates are beyond insulting elsewhere. Aussie banks fro example offer 9%-11% below the mid-market rate for changing to/from Baht.

Personally I do an on-line transfer of AUD from my Aussie bank to my Thai bank account & get my Thai bank's TT rate. If I send in the morning Australian time it always lands in my Thai bank account that same afternoon.

[TallGuyJohninBKK]

Traveler's checks aren't usually a very economical way of handling currency exchange in Thailand.

In most/all cases, the currency booth or bank is going to charge you a fee for cashing each and every check. A lot of people's home banks also charge a fee for issuing the checks in the first place, even if yours doesn't.

You'll also get an exchange rate that is lower than an ATM transaction, assuming you use an ATM that doesn't charge the 150 baht withdrawal fee like AEON.

Of course, it also depends on what if any fees your home country bank is charging you for using their card abroad. If those are very high, then travelers' checks might not be the best alternative, but might be better than a bad home bank alternative.

[bkk_mike]

The 150 baht charge is (at least at BKK Bank and Siam Commercial Bank) only for foreign visa and mastercard.

i.e. I don't pay the 150 baht with my Hong Kong based HSBC atm card as that's Union Pay rather than visa/mastercard.

Bangkok Bank used to charge me 150 while SCB was free, but now both are free. That might be the free foreign withdrawals that got mentioned.

Edited December 18, 2011 by bkk_mike

[TallGuyJohninBKK]

I don't believe the original 150 baht fee on foreign card ATM withdrawals policy, as adopted by the Thai Bankers Assn., was limited to only VISA and MC logo cards... For example, I believe AMEX cards would be charged as well. I think the policy wording was something like to charge cards not belonging to the Thai "ATM Pool" collective.

By ATM card, I assume you mean an ATM only card, no VISA or MC logo, and cannot be used for purchases, just ATM withdrawals...

There have been misc. reports in the past couple years of people using certain cards from certain countries that seemed to avoid the 150 baht fee, at least at some Thai bank company ATMs, and sometimes not at others.... But there's never been enough of those kind of reports to clarify just what/where the exceptions might be.

[nong38]

Of course they might just have to fit in be the same as the local banks, being different might not go down well with the locals. I also think it might difficult to explain western ideas on how to run a bank to a thai who has never experienced anything like this before. Lets not get to excited by this "good news" lets see what develops, all in good time :jap: