Quick cash for condo

[worgeordie]

good example, or a family of three stuck in a studio. Ot Thais, who were transferred for work to another city. As far as carrying them on their books, the big banks in the US, UK,, Germany and elsewhere do the same thing. All have been pressured by recent rule changes to "mark to market." It would be much better for everyone, if they were forced to liquidate by auction within several years (or less). The neighborhood suffer a lot, too, as there are uncollected moo baan fees, uncared for lawns, etc.. An uncared for lawn can become a jungle quick in Thailand.

"Mark to market" means to take each property and change the amount it is carried on the books to real market value. This is what at least US banks had to do, and why so many went broke. Most of the ones that went broke were absorbed by bigger banks which had the capital to take them over. The government also kicked in cash for many, and many have paid most or all of it back, but even that shows on the books as a liability if not paid.

The banks are regularly audited and the books are clean.

This is what Thai banks won't do, aren't required to do, and is the very reason that many units build in or about 1997 are still sitting empty and rotting. As long as the bank owns it, it can be carried on the books for what the value was originally stated as.

If Thai banks had to write off all of the actual losses they have from depreciated "assets," I believe many of them would be bankrupt.

Does the BOT use the "Current Exposure Method?" And isn't this accurate? Doesn't the Current Exposure Method take into consideration the Mark to Market value of property? Just saying......

The banks here are fanatical in their adherence to the principal that what is owed on a property is realized and there are 1000s of bank owned properties that will simply sit there forever, They simply don't auction them until a very long time has elapsed, occasionally a condo which is owed substantial common area fees can push the bank to sell but it is rare, and often the common area fees are more than the condo is worth. There are many here who sniff around the auctions regularly and speak Thai and they are finding it very tough to find 'bargains' - ten years ago it was easier (for some reason).

What the banks put up for Auction is mostly over priced crap,all the good stuff is taken by

their selected clients,friends,etc, it will be very difficult to find anything now that could be

classed as a "bargain", sellers seem to be asking telephone number prices for their properties,

Some people in our moo bahn have paid 4-5 million,then recondition the houses,and are renting

them at 12-15K, which does not really offer returns,and is not worth the hassle.

Everybody is looking for a bargain,with the bank rates been so low,and the sellers will not budge

from the prices they think its worth,so its a very difficult situation to try and turn a profit.very difficult.

regards Worgeordie

[thailiketoo]

The assets held by the BOT (Bank of Thailand) are accurately measured and include a time factor in that valuation. They are measured by a system called, "Current Exposure Method." You can google it if you want to refute your old wives tales about failed Thai banks still holding properties at a 1997 valuation.

[mccw]

Hi

Sorry To interject, but, I think you are arguing about two completely different things.

The Bank of Thailand, ie the national Bank of the country, would be unlikely to be holding any "properties" at all- rather they hold the nations cash reserves and maybe some bonds.

The banks involved in retail loans/ mortgages etc are totally separate and do indeed have properties on their books- marked at the full outstanding loan amount I am told by bankers themselves upon occasions that I have tried to negotiate discounts; according to them it is policy not to accept less than the outstanding loan amount. I am sure that the foreclosed properties with only a small outstanding amount are offered to the best connected first- naturally.

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[thailiketoo]

Hi Sorry To interject, but, I think you are arguing about two completely different things. The Bank of Thailand, ie the national Bank of the country, would be unlikely to be holding any "properties" at all- rather they hold the nations cash reserves and maybe some bonds. The banks involved in retail loans/ mortgages etc are totally separate and do indeed have properties on their books- marked at the full outstanding loan amount I am told by bankers themselves upon occasions that I have tried to negotiate discounts; according to them it is policy not to accept less than the outstanding loan amount. I am sure that the foreclosed properties with only a small outstanding amount are offered to the best connected first- naturally. Sent from my iPhone using Thaivisa Connect Thailand mobile app

Not really. Bonds. Value is determined under the Credit Equivalent Amount as opposed to the previous financial derivatives under original exposure method.

I really don't think the people posting in this thread have an understanding of the role of the BOT with the other banks in Thailand. Nor do I think they have an understanding of the changes that have been made or what was the situation before the changes.

They could start by reading, "Guideline for Calculation of Credit Risk for Commercial Banks,"and forget about the TV old wives tales.

[mccw]

Hi Sorry To interject, but, I think you are arguing about two completely different things. The Bank of Thailand, ie the national Bank of the country, would be unlikely to be holding any "properties" at all- rather they hold the nations cash reserves and maybe some bonds. The banks involved in retail loans/ mortgages etc are totally separate and do indeed have properties on their books- marked at the full outstanding loan amount I am told by bankers themselves upon occasions that I have tried to negotiate discounts; according to them it is policy not to accept less than the outstanding loan amount. I am sure that the foreclosed properties with only a small outstanding amount are offered to the best connected first- naturally. Sent from my iPhone using Thaivisa Connect Thailand mobile app

Not really. Bonds. Value is determined under the Credit Equivalent Amount as opposed to the previous financial derivatives under original exposure method.

I really don't think the people posting in this thread have an understanding of the role of the BOT with the other banks in Thailand. Nor do I think they have an understanding of the changes that have been made or what was the situation before the changes.

They could start by reading, "Guideline for Calculation of Credit Risk for Commercial Banks,"and forget about the TV old wives tales.

Your obviously far better read than me.

So just to be clear- you weren't talking about the BoT actually "holding property" but are talking about the methods the BoT uses to evaluate the health of the Thai commercial banks.

So I googled as you suggested (thanks for the tip) but hmm - Ok- your take on this please- because from a quick reading from what I can see (point 5.2.1 - "risk weights 0" ie in the same category as regular cash deposits, go down to sub point 16) ""Assets resulting from marking to market of financial derivatives""

Then later under a risk weighting of 1

"""In cases where commercial bank is able to calculate daily net value of any mutual fund in accordance with the net value of assets of which the issuer of such mutual fund is holding, the bank may select the risk weight of the such assets in accordance with the proportion, type and amount that the fund actually invests in each cases as stipulated by this Notification instead of the risk weight in 5.2.6.

(6) Land, buildings, equipments, other fixed assets and foreclosed"

Previously they say loans "shall not exceed the valuation of the asset."

So that to me looks like they do mark things to market & using reverse logic that loans shall no exceed asset value meaning they do not consider any asset to be worth less than the loan amount?

I'm certainly not an expert on the intricate legal workings of how its all worked out in practice but from what I read recently in the financial press; the Thai commercial banks have capital ratios of 8-19%, compared to UK, US or EU banks that is fantastic and if they are all playing to the same tune and providing a solid floor to the property market then that's quite all right with me.

http://www2.bot.or.th/fipcs/Documents/FPG/2551/EngPDF/25510344.pdf

[mccw]

^ the bit about mutual funds I meant to delete but the TV app has a problem with editing so I just say to ignore that bit instead here.

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