Thailand: GSB, BAAC unions protest loan to pay rice farmers

[webfact]

GSB, BAAC unions protest loan to pay rice farmers
The Nation

BANGKOK: -- The Government Savings Bank Trade Union yesterday issued an open letter calling for an immediate halt to any attempts to prod the GSB into lending to the state-run Bank for Agriculture and Agricultural Cooperatives, even if the loan would be used to make long-overdue payments to farmers for rice pledged to the government.

The southern branch of the BAAC's labour union also issued a letter to the entire staff asking them to dress in black today in protest against the delivery of the Bt20-billion interbank loan scheduled today from the GSB to the BAAC for payments to rice farmers.

The GSB letter claimed the loan to the BAAC was not needed as the BAAC already had sufficient liquidity, as widely reported. It demanded that GSB management immediately cancel any loan, if granted already or offered to the BAAC. It also called on management not to offer credit in a manner that would weaken the confidence of customers, or the public, or disrupt the bank's affairs.

The campaign for BAAC staff to wear black follows news reports that the BAAC borrowed Bt20 billion last week from the interbank market, which is for loans of up to 30 days at low interest from banks with excess liquidity to banks needing short-term liquidity. One-fourth or Bt5 billion was sent from the GSB to the BAAC on Friday, and the next Bt5 billion will be transferred today.

The BAAC's southern labour union statement said this loan would erode customer confidence in the bank's liquidity.

Normally, a bank will tap the interbank market when it faces a liquidity problem but the BAAC does not have such a liquidity problem that it needs help from the GSB. This means the bank is using this way to support the government's rice-pledging scheme.

"If the BAAC's management continues to borrow funds, the labour union will escalate the level of its anti-bank management activities," the letter said.

Caretaker Commerce Minister Niwatthamrong Boonsongpaisan said the government was ready to pay what it owes to rice-pledging farmers at the rate of Bt4 billion a day on average starting today after the government succeeded in raising funds from both borrowing from banks and selling its rice in the open market.

The ministry's Foreign Trade Department reported that the rice auction last Wednesday succeeded in selling 460,000 tonnes. Combined with direct sales to exporters of 200,000 tonnes, the department will have brought in Bt7 billion. This does not include the sale of 220,000 tonnes via the Agricultural Futures Exchange of Thailand on Thursday, which will be finalised today.

GSB president Woravit Chailimpamontri told a press conference yesterday that the bank decided to extend the interbank loan of Bt5 billion to the BAAC to help improve the liquidity of the BAAC, following the bank board's approval on January 8.

The GSB will take care of all deposits, and this will not be affected by its granting the interbank loan to the BAAC, he said, adding that the loan decision was in line with good governance.

"The bank has the right to suspend giving a new credit line in the interbank market to the state-run Bank for Agriculture and Agricultural Cooperatives if the GSB finds larger cash withdrawals within the next few days," he said.

The GSB used its profit and retained capital as the source of funds, not deposits, for the interbank loan to the BAAC, he said.

The maximum credit line to the BAAC is Bt20 billion, but the GSB has not yet considered giving that much to the BAAC, he said.

Under the loan agreement, the BAAC is requested to repay its debt within 30 days before drawing again on the credit line.

The transfer of the Bt5 billion interbank loan will depend upon the borrower's purpose, he said when asked if the loan will be used to make overdue payments to rice farmers, since the BAAC is responsible for allocating rice-scheme payments to farmers.

The GSB has Bt1.87 trillion in deposits, Bt2.17 trillion in assets and Bt200 billion in liquidity.

"We hope our customers will understand what the bank does. We provide interbank loans to 35 banks in the system, not only for the BAAC. And we hope our customers will not come in to withdraw money from the bank," he said.

Kittiya Todhanakasem, a first senior executive vice president of state-invested Krungthai Bank, said the bank did not approve the interbank loan of Bt20 billion to the BAAC as reported in the media.


-- The Nation 2014-02-17

[timewilltell]

What idiot running a bank says he hopes depositors will not come in and start taking their money out because his bank is extending credit on very dubious terms.

I read the guy has a colorful history of career support by the government - looks like he is paying his dues but is a very naive laddie

[iancnx]

Next... A run on the banks. Could it get any worse? Is this all part of a grand design for total anarchy?

[pedro01]

Looks like a run is on the cards according to the jungle drums.

Maybe UDD 'guards' will step up to prevent anti govt withdrawers.

Sent from my iPhone using Thaivisa Connect Thailand

[chainarong]

Not looking good , if the bank decides to go ahead with these loans and it back fires on them that's there call, they must take the consequences , backing anything from the PTP, could end up with death wish 10, personally I would not like my fund bank being involved with this Administration , only because they cannot be trusted and their word means 0. On an off topic , due to the drought in the Eastern part of Australia, there is one suicide every three weeks , reported on Sunrise this morning, the farmers lot is not a happy one.

Edited February 17, 2014 by chainarong

[Ricardo]

Why would an account-holder take the risk, of leaving funds in a government-'backed' bank, which allows itself (and its' depositors' assets) to be used like this ?

Can't blame the employees for being a trifle concerned, either.

And this is 30-day borrowing, what will be the source of the capital to repay the short-term inter-bank loans, when the government appears to be unable to further-increase its budget for the scheme's losses, and G2G-sales & sales-into-the-domestic-market are going so poorly ?

Cue statement from the caretaker-Minister for White-Lies, about how this is all totally normal, and not a sign of mismanagement or incompetence by the previous-administration. ?

Cue leadership from the caretaker-PM, as the person ultimately responsible for hanging onto power like grim death the management of the rice-scheme, unless the NACC take a hand ?

Cue further illogical statements from Tarit or Chalerm, about how it's all still Suthep's fault ?

Cue further comment from Moody's ?

Time for coffee ...

[kikoman]

A run on the banks would hurt the Rich owners of the financial system more then the farmers, it a free country the people have the right to chose which bank to protect their money as I have already changed banks, Let the unions howl all they want,!

Kittiratt stated this opposition "will show who is sincere with the Farmers and who is trying to use farmers suffering as political tools".

We know" but the farmers need to know!"

Cheers

[rreddin]

Next... A run on the banks. Could it get any worse? Is this all part of a grand design for total anarchy?

Anarchy? That would only be the begiinning. There are even some naive farang on this forum advocating a run on a bank without any thought for the consequences not only of Thailand's economy, system of government and the welfare of the entire population, but also the effects on the region's economy and on the system of global economics.

The stakes in this winner takes all poker game are indeed very high. Suthep is a sideshow not a player. If those people advocating a run on a bank are indeed supporters of one of the players it is an indication of just how much that player wants to win the game.

As for the farmers - all of the farmers in the country - now they know beyond any doubt that the bank set up to help them and their industry is really not their friend.

[CWMcMurray]

Wife has account with GSB and says she plans to go close her account tomorrow...

Don't think that there will be any large scale run on the bank, but there will be a number if customers that close their accounts with GSB

Nothing wrong with that... Perfectly acceptable for customers to take their business elsewhere if they do not agree with how the bank is doing things

Don't think it would cause any major damage to the bank over all, but even in the worst case... If there was a major run on GSB and it caused this bank to fail, don't think it would cause the destruction of the Thai economy in any way.

It would just cause this bank to go under and then other banks would come in to buy up its parts

As the run would not be widespread or felt by any other banks, and is not due to any lack of trust of the banking system... Should not have any serious effect on economy as a whole

Although at the end of the day, don't really believe that the total loss of customers will be enough to put the bank at risk.

Just enough to see a small impact on the bottom line, but as is gov bank, they really don't care about share holders or final bottom line...

Sent from my iPhone using Tapatalk

Edited February 17, 2014 by CWMcMurray

[MaxLee]

In this case, the Pheu Thai goons will tell the rice farmers, blame and raid the GSB, BAAC union members

Edited February 17, 2014 by MaxLee

[Thait Spot]

A run on the banks would hurt the Rich owners of the financial system more then the farmers, it a free country the people have the right to chose which bank to protect their money as I have already changed banks, Let the unions howl all they want,!

Kittiratt stated this opposition "will show who is sincere with the Farmers and who is trying to use farmers suffering as political tools".

We know" but the farmers need to know!"

Cheers

How on earth will a run on government banks hurt "rich owners"? It's more likely to benefit commercial bankers.

[GeorgeO]

Next... A run on the banks. Could it get any worse? Is this all part of a grand design for total anarchy?

Anarchy? That would only be the begiinning. There are even some naive farang on this forum advocating a run on a bank without any thought for the consequences not only of Thailand's economy, system of government and the welfare of the entire population, but also the effects on the region's economy and on the system of global economics.

The stakes in this winner takes all poker game are indeed very high. Suthep is a sideshow not a player. If those people advocating a run on a bank are indeed supporters of one of the players it is an indication of just how much that player wants to win the game.

As for the farmers - all of the farmers in the country - now they know beyond any doubt that the bank set up to help them and their industry is really not their friend.

From what I see, there is the possibility of a run on this particular bank, and that is what I have been suggesting for several weeks, that the first bank to agree to lend money to support this failed scheme could well see such a decision leading to its demise. This is a far cry from a run on the banking system, whereby all customers rush to remove their funds, and there would be no drastic consequences on the Thai or global economy such as you are suggesting.

[JesseFrank]

But didn't Mr Likit said yesterday that the GSB labour union supported the deal ? You wouldn't have expected that to be a lie, would you ?

GSB labour union head Likit Klinthanom said the 17 billion baht is part of a total of 20 billion baht in loans that was approved by the board on Jan 8. The process of finalising the loan and transferring the funds, however, was disrupted by anti-government protesters.

The loan carries a 30-day maturity with just over 2% annual interest, he said, adding that such a borrowing arrangement is normal practice and the GSB has surplus liquidity to extend to other banks.

Mr Likit said the labour union supports the bank’s deal.

http://www.thaivisa.com/forum/topic/704853-b17bn-rice-loan-eases-pressure-on-government/

Edited February 17, 2014 by JesseFrank

[lostinsurin]

Wife has account with GSB and says she plans to go close her account tomorrow...

Don't think that there will be any large scale run on the bank, but there will be a number if customers that close their accounts with GSB

Nothing wrong with that... Perfectly acceptable for customers to take their business elsewhere if they do not agree with how the bank is doing things

Don't think it would cause any major damage to the bank over all, but even in the worst case... If there was a major run on GSB and it caused this bank to fail, don't think it would cause the destruction of the Thai economy in any way.

It would just cause this bank to go under and then other banks would come in to buy up its parts

As the run would not be widespread or felt by any other banks, and is not due to any lack of trust of the banking system... Should not have any serious effect on economy as a whole

Although at the end of the day, don't really believe that the total loss of customers will be enough to put the bank at risk.

Just enough to see a small impact on the bottom line, but as is gov bank, they really don't care about share holders or final bottom line...

Sent from my iPhone using Tapatalk

"Wife has an account"

Sounds about right, were you not on here last week telling us about your wife moving her funds?

[Gweiloman]

Instead of calling on the employees to wear black, why doesn't the Union put it's money where it's mouth is and tell the employees who disagree with the bank's decision to just resign?

I am sure there are plenty of other people who would like to work in a government bank.

The purpose of the inter-bank loan is to shore up BAAC's liquidity in the short term so that they can continue to pay out what they OWE to the farmers.

The same thing happens when there is a run on any bank in the world. Banks borrow from each other to cover cash flow in cases of large withdrawals. I was working in a bank in one of my first jobs when there was a run on the bank next door. The funny thing was that as the customers were withdrawing their cash next door, they came to my bank and deposited the money there. At the same time, we were passing cash round the back, back to the bank next door so that they could continue to process withdrawals. Admittedly this was in a fairly small provincial town, back in the early eighties. This town has since then grown to be one of the region's financial powerhouses.

[Basil B]

What idiot running a bank says he hopes depositors will not come in and start taking their money out because his bank is extending credit on very dubious terms.

I read the guy has a colorful history of career support by the government - looks like he is paying his dues but is a very naive laddie

Yes I do not advocate starting a run on the banks....

But "what Idiot" would keep any money in any Thai bank at this time?

And "what Idiot" would actually vote for the obviously corrupt government?

Seems Thailand is full of them...

[Soutpeel]

Wife has account with GSB and says she plans to go close her account tomorrow...

Don't think that there will be any large scale run on the bank, but there will be a number if customers that close their accounts with GSB

Nothing wrong with that... Perfectly acceptable for customers to take their business elsewhere if they do not agree with how the bank is doing things

Don't think it would cause any major damage to the bank over all, but even in the worst case... If there was a major run on GSB and it caused this bank to fail, don't think it would cause the destruction of the Thai economy in any way.

It would just cause this bank to go under and then other banks would come in to buy up its parts

As the run would not be widespread or felt by any other banks, and is not due to any lack of trust of the banking system... Should not have any serious effect on economy as a whole

Although at the end of the day, don't really believe that the total loss of customers will be enough to put the bank at risk.

Just enough to see a small impact on the bottom line, but as is gov bank, they really don't care about share holders or final bottom line...

Sent from my iPhone using Tapatalk

Problem is if there is a run on GSB, this will cause a knock on and other banks risk the possiblity of runs as well because confidence in the whole banking system is hit, even if they are not involved the great rice scam

[casualbiker]

A run on the banks would hurt the Rich owners of the financial system more then the farmers, it a free country the people have the right to chose which bank to protect their money as I have already changed banks, Let the unions howl all they want,!

Kittiratt stated this opposition "will show who is sincere with the Farmers and who is trying to use farmers suffering as political tools".

We know" but the farmers need to know!"

Cheers

You say you have changed banks .. I take it you have put all your money into GSB or BACC then.. yes?

Sent from my XT1032 using Thaivisa Connect Thailand mobile app

[Thait Spot]

The only question that depositors should care about here - unless they are being political - is whether or not the funds being loaned to the BAAC are depositors' money or the bank's

[casualbiker]

The purpose of the inter-bank loan is to shore up BAAC's liquidity in the short term so that they can continue to pay out what they OWE to the farmers.

Firstly BAAC do not owe the farmers any money. The government does. BAAC are just the payment apparatus. Second BAAC do not have a liquidity problem. The rice scheme does!

Depending on which report you read BAAC has between 30 days to 3 months to pay back.. So a bit like a consumer using one credit card to pay another.

If the government get serious about selling the rice then OK.. but to many quick fix auctions will push the price down further ..

Sent from my XT1032 using Thaivisa Connect Thailand mobile app

[englishoak]

We shall see if theres a run or not, im betting (hoping ) nothing will happen . Unless it goes viral on facebook of course and then it could be doomsday is coming in an avalanche to a bank near you very soon.

As I said the other week why take the risk with any thai banks in this climate of scaremongering and bs ? ive been out of Thai banks apart from operating funds and a sleeper amount in thai banks of a few thousand losable baht just to keep them open for about a month now.

[kerrysum]

Gee, I wonder where these union labors came from......

Can't make money on the farm,

go to city and make money....

OH You forget where you come from?????

Miss you Mom and Dad, oh and I need some more money please.......

Funny story Mom & Dad,

What you told me was correct.......

[webfact]

Govt Savings Bank lends Bt5 billion to BAAC
By Digital Content



BANGKOK, Feb 17 – The Government Savings Bank (GSB) admitted that it has granted Bt5 billion in loans to the Bank of Agriculture and Agricultural Cooperatives (BAAC) amid opposition by the GSB labour union for fear that the loans would be paid to farmers under the government's rice pledging scheme.

GSB president Woravit Chailimpamontri said yesterday that the interbank loans to BAAC would be short term for only 30 days and the amount was not as high as the Bt20 billion as widely reported.

He said the borrowing was from GSB’s profit and capital, not from the public's savings, urging customers to be confident that the loans would not impact the bank's financial and savings status.

Mr Woravit said the decision to grant loans was made by the Board of Directors last Thursday but negotiations for borrowing started late last year before the anti-government protest was launched.

The GSB chief said the bank's loans were to add liquidity to the BAAC which had previously borrowed from the bank and paid back loans before the deadline.

He reported normal deposit and withdrawal activities, adding that the GSB’s total deposits are Bt1.87 trillion with Bt2.17 trillion assets and a Bt200 billion liquidity surplus.

Discouraging depositors from withdrawing money from GSB, he said the bank has so far given interbank loans to 35 Thai and foreign banks in Thailand, insisting that there was no shady deal in extending loans to the BAAC.

He said GSB branches in Bangkok with major depositors were told to be prepared for possible massive withdrawals.

The GSB Board of Directors will meet tomorrow to find measures to help people who have borrowed from loan sharks, he said.

Preliminary assistance may involve lending at Bt100,000 to each borrower with a monthly interest at 1 per cent.

The BAAC labour union in the South issued a statement yesterday demanding the management’s clarification about the loans from GSB and threatened to dress in black today to protest against the borrowing.

Meanwhile, Kittiya Todhanakasem, senior executive vice president of state-run Krung Thai Bank, ruled out reports that the bank has granted Bt20 billion in interbank lending to BAAC. (MCOT online news)


-- TNA 2014-02-17

[telecom]

We shall see if theres a run or not, im betting (hoping ) nothing will happen . Unless it goes viral on facebook of course and then it could be doomsday is coming in an avalanche to a bank near you very soon.

As I said the other week why take the risk with any thai banks in this climate of scaremongering and bs ? ive been out of Thai banks apart from operating funds and a sleeper amount in thai banks of a few thousand losable baht just to keep them open for about a month now.

We shall see if theres a run or not, im betting (hoping ) nothing will happen.

Well that was one bet you will be losing.

Yes.... It is going viral with one story on front page of sanook.com of one person already withdrawn their 58 million deposit.

Yes.... it is going very viral on the social networks, forums and Thai sites.

This is the start of the snowball effect that ruined the Northern Rock... It was done damage by investing in the US sub-prime mortgage scam, but it was the run on the bank when the news broke that bankrupted them to the point they needed to borrow billions from the government.

It starts with a few, and those who were not going to withdraw start to panic when they see the run and so they join the queue. It is the snowball effect that kills the bank.

Let's just say, I bet there are some huge regrets building up with certain bank officials.

Edited February 17, 2014 by telecom

[robblok]

A run on the banks would hurt the Rich owners of the financial system more then the farmers, it a free country the people have the right to chose which bank to protect their money as I have already changed banks, Let the unions howl all they want,!

Kittiratt stated this opposition "will show who is sincere with the Farmers and who is trying to use farmers suffering as political tools".

We know" but the farmers need to know!"

Cheers

How on earth will a run on government banks hurt "rich owners"? It's more likely to benefit commercial bankers.

Don't worry he heard it on his red tv channel so it must be true. GOVERNMENT BANK rich owners

[JesseFrank]

We shall see if theres a run or not, im betting (hoping ) nothing will happen . Unless it goes viral on facebook of course and then it could be doomsday is coming in an avalanche to a bank near you very soon.

As I said the other week why take the risk with any thai banks in this climate of scaremongering and bs ? ive been out of Thai banks apart from operating funds and a sleeper amount in thai banks of a few thousand losable baht just to keep them open for about a month now.

We shall see if theres a run or not, im betting (hoping ) nothing will happen.

Well that was one bet you will be losing.

Yes.... It is going viral with one story on front page of sanook.com of one person already withdrawn their 58 million deposit.

Yes.... it is going very viral on the social networks, forums and Thai sites.

This is the start of the snowball effect that ruined the Northern Rock... It was done damage by investing in the US sub-prime mortgage scam, but it was the run on the bank when the news broke that bankrupted them to the point they needed to borrow billions from the government.

It starts with a few, and those who were not going to withdraw start to panic when they see the run and so they join the queue. It is the snowball effect that kills the bank.

Let's just say, I bet there are some huge regrets building up with certain bank officials.

You must be wrong about this, the MAJORITY of the Thai population support this government and blames Suthep.

Where are Gerry1011, Kikoman and the other red eyed members to confirm this ?

[telecom]

Seems like the panic has started and the lies have started to flow.

He stated only yesterday that they were lending 20 billion at 5 billion a week, now he is just saying 5 billion... Meaning that they have pulled back on the rest of the promised loan because there is a run on the bank.

I am sick of hearing this inter-bank loan crap. This is the government borrowing the money hidden (badly) behind a facade of inter-bank lending. The Finance Ministry has guaranteed the loan and is paying both the interest and the principle, meaning it is them who are doing the borrowing.

When a bank starts lying to its customers, they will withdraw their money, because one lie leads to another, until nobody knows what is true and what is bullshit.... safer to just change banks for one you can trust.

[englishoak]

We shall see telecom i went past a BKK branch about two hrs ago and it had no one outside.... that does just look like a normal Monday in many banks.. any idea of the branch or the date of that pic ?

If people want to make it into a panic it will be, nothing to worry about for people 5b is absolutely peanuts in real terms. NR was far far more serious within a few hrs.... im betting if its turning sour they will just shut the banks for a few days until it calms down.

I bet there will be a few other bank CEOs out there with a few bowel problems today though

[siampolee]

One can only sympathize with the banks management team, being the employees of a state entity they have to follow what their commission agent orders thus bringing on those dreadful financial headaches and dizzy spells those employees are suffering. Never mind one can always wash ones hands and find alternative employment when the bank has to cease trading.

Edited February 17, 2014 by siampolee

[animatic]

A whopping 6.5% of what is owed and long in arrears.

Well done government, should balance well versus the 11th farmer suicide today...

Edited February 17, 2014 by animatic