Thailand's Booming Banks Wary Of Credit Bubble

[detinu68]

http://www.reuters.com/article/2013/04/19/us-thailand-banks-earnings-idUSBRE93I0HX20130419

An interesting article above.

For now they're making record profits from loans, which is a reflection of the strong economy.

Let's hope Thai bankers have learned from their Western counterparts' mistakes.

[ExpatOilWorker]

Commercial Banks in Thailand are doing fine for now, but a few of the sate banks could be under pressure.

"Bad loans: SME Bank 40%, Islamic Bank 30%"

http://investvine.com/two-thai-banks-under-heavy-pressure/

[detinu68]

Commercial Banks in Thailand are doing fine for now, but a few of the sate banks could be under pressure.

"Bad loans: SME Bank 40%, Islamic Bank 30%"

http://investvine.com/two-thai-banks-under-heavy-pressure/

I understand your point.But they're backed by taxpayers. No worries for them.

[NeverSure]

Commercial Banks in Thailand are doing fine for now, but a few of the sate banks could be under pressure.

"Bad loans: SME Bank 40%, Islamic Bank 30%"

http://investvine.com/two-thai-banks-under-heavy-pressure/

I understand your point.But they're backed by taxpayers. No worries for them.

The tip of the iceberg.

US banks, Wall Street, big insurance companies (AIG) were all backed by the taxpayers. It still dumped the economy while running the government (that's the taxpayers) far into debt.

Thailand wants a dose of the same and it's going to get it. The signs are everywhere.

[detinu68]

Commercial Banks in Thailand are doing fine for now, but a few of the sate banks could be under pressure.

"Bad loans: SME Bank 40%, Islamic Bank 30%"

http://investvine.com/two-thai-banks-under-heavy-pressure/

I understand your point.But they're backed by taxpayers. No worries for them.

The tip of the iceberg.

US banks, Wall Street, big insurance companies (AIG) were all backed by the taxpayers. It still dumped the economy while running the government (that's the taxpayers) far into debt.

Thailand wants a dose of the same and it's going to get it. The signs are everywhere.

No you're 100% wrong.

Lehman Brothers, AIG, General Motors or any other private enterprise during the meltdown back in 2007/08 were not backed by US taxpayers.

Lehman Brothers went bankrupt.

AIG and GM were rescued by US taxpayers - i.e. nationalised.

[wooloomooloo]

No you're 100% wrong.

Are you certain? LOS is going to hit the wall and go through the other side soon enough.

Easy credit is a sure sign and Thailand is riding a wave.

Simple lesson in economics - banks creditors suddenly fall on hard times and unable to honour their obligations. Walk out to the street to evidence the debt of the middle class. Note the expensive cars, iPhones and property. The majority are not rich and beholden.

Thailand would be hard pushed to bail out the major banks. Where and what are the assets of this emerging economy?

[NeverSure]

Commercial Banks in Thailand are doing fine for now, but a few of the sate banks could be under pressure.

"Bad loans: SME Bank 40%, Islamic Bank 30%"

http://investvine.com/two-thai-banks-under-heavy-pressure/

I understand your point.But they're backed by taxpayers. No worries for them.

The tip of the iceberg.

US banks, Wall Street, big insurance companies (AIG) were all backed by the taxpayers. It still dumped the economy while running the government (that's the taxpayers) far into debt.

Thailand wants a dose of the same and it's going to get it. The signs are everywhere.

No you're 100% wrong.

Lehman Brothers, AIG, General Motors or any other private enterprise during the meltdown back in 2007/08 were not backed by US taxpayers.

Lehman Brothers went bankrupt.

AIG and GM were rescued by US taxpayers - i.e. nationalised.

Let's not nit pick. "backed" by means bailed out at that moment. The taxpayers bailed out many banks, wall street, aig, gm, chrysler, etc. Yes, they didn't bail out lehman Brothers, nor Washington Mutual Bank or a few others, but most got bail outs or capital infusions.

The point is that the banks in this article are going to need Thai government bailouts and it's just the tip of the iceberg. They haven't learned a thing about what happened in the US, and they are going to learn it the hard way.

[NeverSure]

No you're 100% wrong.

Are you certain? LOS is going to hit the wall and go through the other side soon enough.

Easy credit is a sure sign and Thailand is riding a wave.

Simple lesson in economics - banks creditors suddenly fall on hard times and unable to honour their obligations. Walk out to the street to evidence the debt of the middle class. Note the expensive cars, iPhones and property. The majority are not rich and beholden.

Thailand would be hard pushed to bail out the major banks. Where and what are the assets of this emerging economy?

Good post.

In 1997 Thailand got a big loan from the IMF to keep its banks open.

[detinu68]

No you're 100% wrong.

Are you certain? LOS is going to hit the wall and go through the other side soon enough.

Easy credit is a sure sign and Thailand is riding a wave.

Simple lesson in economics - banks creditors suddenly fall on hard times and unable to honour their obligations. Walk out to the street to evidence the debt of the middle class. Note the expensive cars, iPhones and property. The majority are not rich and beholden.

Thailand would be hard pushed to bail out the major banks. Where and what are the assets of this emerging economy?

I can't answer your question because I don't understand your question.

Please give me something concrete.

i.e. what do you mean exactly?

[NeverSure]

No you're 100% wrong.

Are you certain? LOS is going to hit the wall and go through the other side soon enough.

Easy credit is a sure sign and Thailand is riding a wave.

Simple lesson in economics - banks creditors suddenly fall on hard times and unable to honour their obligations. Walk out to the street to evidence the debt of the middle class. Note the expensive cars, iPhones and property. The majority are not rich and beholden.

Thailand would be hard pushed to bail out the major banks. Where and what are the assets of this emerging economy?

I can't answer your question because I don't understand your question.

Please give me something concrete.

i.e. what do you mean exactly?

Read the link in the second post in this thread. Some Thai banks are already insolvent and are asking for bailouts.

It's the tip of the iceberg. 30 - 40% of those loans in those banks are non-performing.

We haven't seen anything yet like what we're going to.

[detinu68]

Neversure:

How can you say that Thai Banks "are going to need Thai government bailouts"?

Do you have a crystal ball?

Thai banks are in rude good health. Good luck to them.

What you say is utter nonsense.

Just because the US used socialist style policies to save GM and other companies doesn't mean that Thailand will have to do the same for its industries (the "socialist" policy worked really well for GM by the way).

Back then, and right now, Thai industry does not need taxpayer's help.

Thailand's doing OK thanks.

[NeverSure]

Neversure:

How can you say that Thai Banks "are going to need Thai government bailouts"?

Do you have a crystal ball?

Thai banks are in rude good health. Good luck to them.

What you say is utter nonsense.

Just because the US used socialist style policies to save GM and other companies doesn't mean that Thailand will have to do the same for its industries (the "socialist" policy worked really well for GM by the way).

Back then, and right now, Thai industry does not need taxpayer's help.

Thailand's doing OK thanks.

Two Thai banks under heavy pressure

http://investvine.com/two-thai-banks-under-heavy-pressure/

Posted by Arno Maierbrugger

on February 22, 2013

in Banking & Finance, Capital Markets, Commercial & Corporate Banking,

Islamic Bank of Thailand and SME Bank, a Thai financial institution

specialising on small and medium company financing, are currently

feeling the heat of non-performing loans and have been asking the

government for capital injections.

The SME Bank has asked for 6 billion baht ($200 million) of capital

increase, whereas the Islamic Bank of Thailand (IBank) has asked for as

much as 14 billion baht ($466 million).

Non-performing loans at the SME Bank are at 40 per cent of all loans

of after the bank was lending heavily to small and medium enterprises

after the 2011 floods, but a high number of businesses has not been able

to repay the rates regularly.

Bad loans at the IBank are in a range of 30 per cent, the state-owned bank admitted on February 12 and gave the reason with “grossly negligent lending by former executives.”

The Thai Ministry of Finance has said it will increase its scrutiny

in overseeing loan issuance by IBank and the SME Bank, especially the

granting of large loans. The ministry also plans to speed up the process

of reducing non-performing loans carried by the two troubled state

lenders.

IBank has experienced a run of alarmed customers to withdraw their

account balances in the past few days at a combined sum amounting to 4

billion baht, but denies that is in the danger of a “crash”.

It said that customers “have no need to panic.”

Edited April 27, 2013 by NeverSure

[NeverSure]

It is the tip of the iceberg.

[wooloomooloo]

It's the tip of the iceberg. 30 - 40% of those loans in those banks are non-performing.

Good point, NeverSure. Non-performing, to those that do not understand the concept of repayment, means little or no interest being settled and more importantly, principal.

Too many non-performing debts on your books and you'll go bust.

Bear in mind that establishments will not admit to such diminished net take until it's far too late.

[detinu68]

NeverSure:

2 banks?

Is that all you can up with?

Background noise.

[wooloomooloo]

Thai banks are in rude good health. Good luck to them.

Thailand's doing OK thanks.

I can only advise not to retain large amounts of funds in Thai-based bank.

[NeverSure]

NeverSure:

2 banks?

Is that all you can up with?

Background noise.

Those are the first two who have admitted it. One of them, the Islamic bank or "IBank" is government owned.

I started my life as a banker, including being a traveling auditor for two years.

Thai banks don't pass the smell test and I've been yelling it from the rooftops for a long time.

This is just the first two dominoes. As I've been saying, let's revisit this in 5 years. Maybe next year. It's a house of cards.

[detinu68]

Thai banks are in rude good health. Good luck to them.

Thailand's doing OK thanks.

I can only advise not to retain large amounts of funds in Thai-based bank.

Just another stupid generalisation.

Thousands of global investors do exactly that, Western and Asian pension funds and investors.

Thailand is not a banana republic.

[detinu68]

NeverSure:

2 banks?

Is that all you can up with?

Background noise.

Those are the first two who have admitted it. One of them, the Islamic bank or "IBank" is government owned.

I started my life as a banker, including being a traveling auditor for two years.

Thai banks don't pass the smell test and I've been yelling it from the rooftops for a long time.

This is just the first two dominoes. As I've been saying, let's revisit this in 5 years. Maybe next year. It's a house of cards.

It's your choice.

Your money would have been safer in a Thai bank, with much better returns, in Thailand over the last 6 years compared to Western banks.

Check out the interest rates.

Fact.

Of course things can change in the future.

But you can't change history.

[NeverSure]

NeverSure:

2 banks?

Is that all you can up with?

Background noise.

Those are the first two who have admitted it. One of them, the Islamic bank or "IBank" is government owned.

I started my life as a banker, including being a traveling auditor for two years.

Thai banks don't pass the smell test and I've been yelling it from the rooftops for a long time.

This is just the first two dominoes. As I've been saying, let's revisit this in 5 years. Maybe next year. It's a house of cards.

It's your choice.

Your money would have been safer in a Thai bank, with much better returns, in Thailand over the last 6 years compared to Western banks.

Check out the interest rates.

Fact.

Of course things can change in the future.

But you can't change history.

How many times do I have to say that what happened yesterday is no prediction of what will happen tomorrow?

People see a big rise in prices and values, and the herd stampedes toward it. They think that tomorrow is predicted by yesterday.

These two banks, essentially bankrupt are a sign of the real market out there. They are like the canary in the mine.

That article goes on to say that the SME bank my be merged with a larger bank. That's what happened in the US. That's how you avoid having to recapitalize the small one. The bigger one carries it. Then the bigger one finds itself in exactly the same market with the same type of loans, and it fails.

Dominoes.

[NeverSure]

Thai banks are in rude good health. Good luck to them.

Thailand's doing OK thanks.

I can only advise not to retain large amounts of funds in Thai-based bank.

Just another stupid generalisation.

Thousands of global investors do exactly that, Western and Asian pension funds and investors.

Thailand is not a banana republic.

The US isn't a banana republic either but its banks went down.

Thousands of global investors had their money in them.

The "day" before they went down, everyone was clamoring to get in, to buy, to invest in real estate... Even the biggest and the smartest internationally got burned. Ever hear of the derivatives that big banks in Europe ate?

[detinu68]

NeverSure:

2 banks?

Is that all you can up with?

Background noise.

Those are the first two who have admitted it. One of them, the Islamic bank or "IBank" is government owned.

I started my life as a banker, including being a traveling auditor for two years.

Thai banks don't pass the smell test and I've been yelling it from the rooftops for a long time.

This is just the first two dominoes. As I've been saying, let's revisit this in 5 years. Maybe next year. It's a house of cards.

It's your choice.

Your money would have been safer in a Thai bank, with much better returns, in Thailand over the last 6 years compared to Western banks.

Check out the interest rates.

Fact.

Of course things can change in the future.

But you can't change history.

How many times do I have to say that what happened yesterday is no prediction of what will happen tomorrow?

People see a big rise in prices and values, and the herd stampedes toward it. They think that tomorrow is predicted by yesterday.

These two banks, essentially bankrupt are a sign of the real market out there. They are like the canary in the mine.

That article goes on to say that the SME bank my be merged with a larger bank. That's what happened in the US. That's how you avoid having to recapitalize the small one. The bigger one carries it. Then the bigger one finds itself in exactly the same market with the same type of loans, and it fails.

Dominoes.

The SME and Islamic Banks are ridiculously insignificant.

Get real.

The fundamentals in Thailand are good.

The 16 year rise of the Thai Baht to record highs prove it.

Maybe the market has got it wrong, But surely not over 16 years.

[wooloomooloo]

Your money would have been safer in a Thai bank, with much better returns, in Thailand over the last 6 years compared to Western banks.

Check out the interest rates.

Fact.

Of course things can change in the future.

What is your forecast for LOS, detinu68? You hype it then backtrack.

We're not discussing the last six years performance.

What should we invest in in Thailand?

[detinu68]

Thai banks are in rude good health. Good luck to them.

Thailand's doing OK thanks.

I can only advise not to retain large amounts of funds in Thai-based bank.

Just another stupid generalisation.

Thousands of global investors do exactly that, Western and Asian pension funds and investors.

Thailand is not a banana republic.

The US isn't a banana republic either but its banks went down.

Thousands of global investors had their money in them.

The "day" before they went down, everyone was clamoring to get in, to buy, to invest in real estate... Even the biggest and the smartest internationally got burned. Ever hear of the derivatives that big banks in Europe ate?

What's that got to do with Thailand?

While the West was in freefall Thailand did OK.

Please stay on thread.

Edited April 27, 2013 by detinu68

[NeverSure]

What's that got to do with Thailand?

While the West was in freefall Thailand did OK.

Please stay on thread.

Thailand is way overbuilt in real estate, much of it empty, and banks nationwide have 40% of their assets in real estate loans.

Thailand's exports are dropping, part of it due to the new minimum wage and part of it due to the high price of the baht. Jobs will be lost.

Thailand's banks have been making easy credit car loans like there's no tomorrow.

Thais have been buying cell phones on credit and getting credit cards like mad people.

Thailand has a home loan program with nothing down to put the masses into homes. Now, that's exactly what Freddy Mac and Fanny Mae did in the US to drive home building through the roof, and start an avalanche of foreclosures.

Thailand already has a glut of empty housing, with more started every day, and the banks will wind up owning a lot of it. The phenomena of fractional banking will start to back itself out, but there will be no liquidity to cover it. We see the first of two banks - the tip of the iceberg.

Remember, in round numbers, US citizens have 10x the median income of Thais, and cars and cell phones are cheaper.

Thailand is in an unsustainable credit, real estate and auto manufacturing bubble which will burst. Exports of cars will drop due to the high baht, and the car buying program will reduce demand in the end, further hurting production.

Do you want me to go on?

[detinu68]

Your money would have been safer in a Thai bank, with much better returns, in Thailand over the last 6 years compared to Western banks.

Check out the interest rates.

Fact.

Of course things can change in the future.

What is your forecast for LOS, detinu68? You hype it then backtrack.

We're not discussing the last six years performance.

What should we invest in in Thailand?

You mean surely the last 16 years?

Global companies have and continue to invest in Thailand.

I forecast that the Thai economy will perform better than Greece, Spain, Italy, Ireland, Portugal, France, the UK and the US in the near term (2-3 years).

And significantly under-perform Japan.

But that's too simplistic.

How would you like to measure "performance"?

Your choice.

[detinu68]

What's that got to do with Thailand?

While the West was in freefall Thailand did OK.

Please stay on thread.

Thailand is way overbuilt in real estate, much of it empty, and banks nationwide have 40% of their assets in real estate loans.

Thailand's exports are dropping, part of it due to the new minimum wage and part of it due to the high price of the baht. Jobs will be lost.

Thailand's banks have been making easy credit car loans like there's no tomorrow.

Thais have been buying cell phones on credit and getting credit cards like mad people.

Thailand has a home loan program with nothing down to put the masses into homes. Now, that's exactly what Freddy Mac and Fanny Mae did in the US to drive home building through the roof, and start an avalanche of foreclosures.

Thailand already has a glut of empty housing, with more started every day, and the banks will wind up owning a lot of it. The phenomena of fractional banking will start to back itself out, but there will be no liquidity to cover it. We see the first of two banks - the tip of the iceberg.

Remember, in round numbers, US citizens have 10x the median income of Thais, and cars and cell phones are cheaper.

Thailand is in an unsustainable credit, real estate and auto manufacturing bubble which will burst. Exports of cars will drop due to the high baht, and the car buying program will reduce demand in the end, further hurting production.

Do you want me to go on?

In your own words, Thailand has a lot of catching up to do to match the median income of US citizens. The US has hundreds of "tent cities" where poor people live.

And at the same time, the US has a lot of catching up to do with other nations including minnows like Luxembourg, Hong Kong, Norway, Bermuda and The Falkland Islands.

If America is so rich, why does it not take care of its poor and vulnerable citizens?

Asia is catching up fast with the West.

And Thailand has seen and learned from the mistakes made in the US and elsewhere..

I just hope that it's future wealth and income distribution is managed better than in the US.

[NeverSure]

You mean surely the last 16 years?

Global companies have and continue to invest in Thailand.

I forecast that the Thai economy will perform better than Greece, Spain, Italy, Ireland, Portugal, France, the UK and the US in the near term (2-3 years).

And significantly under-perform Japan.

But that's too simplistic.

How would you like to measure "performance"?

Your choice.

You're trying to let the past predict the future, as most people do. But that's never worked. Everything cycles. Always.

Thailand is coming to the end of a cycle. I already posted many of the things I see.

Don't say you weren't warned.

[NeverSure]

In your own words, Thailand has a lot of catching up to do to match the median income of US citizens. The US has hundreds of "tent cities" where poor people live.

And at the same time, the US has a lot of catching up to do with other nations including minnows like Luxembourg, Hong Kong, Norway, Bermuda and The Falkland Islands.

If America is so rich, why does it not take care of its poor and vulnerable citizens?

Asia is catching up fast with the West.

And Thailand has seen and learned from the mistakes made in the US and elsewhere..

I just hope that it's future wealth and income distribution is managed better than in the US.

This isn't about US bashing - again and again. That won't get you any debate points about Thailand.

I can always tell when someone knows he losing a debate, because he goes off topic and starts attacking other people.

Now, what do you think about my points I made about the two belly up Thai banks, the exports dropping, the mountain of building debt, the over built housing market, banks having 40% of their money tied up in real estate loans, the rice export business in collapse (brought to you by the same government that manages the banks and the whole economy) the new minimum wage, the high baht hurting exports, the burgeoning consumer debt, and so on?

Can you please address those without making unrelated attacks?

[detinu68]

You mean surely the last 16 years?

Global companies have and continue to invest in Thailand.

I forecast that the Thai economy will perform better than Greece, Spain, Italy, Ireland, Portugal, France, the UK and the US in the near term (2-3 years).

And significantly under-perform Japan.

But that's too simplistic.

How would you like to measure "performance"?

Your choice.

You're trying to let the past predict the future, as most people do. But that's never worked. Everything cycles. Always.

Thailand is coming to the end of a cycle. I already posted many of the things I see.

Don't say you weren't warned.

Totally false.

Thailand has weathered the economic storm of the last 6 years very well indeed and I think its "cycle* has just begun.

A stable government, low unemployment, relatively low wages, a balanced economy, low inflation, healthy inward investment and a vibrant economy, based on a good balance between the service and manufacturing sectors, means it's well placed to improve the living standards of its citizens.