GSB board member hopes calm to be restored

[webfact]

GSB board member hopes calm to be restored
THE NATION

BANGKOK: -- A MEMBER of the Government Savings Bank board said yesterday that he hoped the bank's deposit and withdrawal situation would return to normal after GSB president Woravit Chailimpamontri tendered his resignation on Tuesday.

Amnuay Preemonwong added that the board believed that Woravit's resignation could put an end to the internal conflict within the organisation, boost customers' confidence, and eventually put a stop to the rash of withdrawals by customers.

Woravit's resignation will be effective 30 days from Tuesday. He had faced intense pressure over the bank's decision to lend Bt20 billion to the government's rice-pledging scheme, which led to a rash of account withdrawals by its customers.

Woravit said on Tuesday that that he had handed his resignation to the board to accept his responsibility on this matter. Still, he insisted that lending to the Bank for Agriculture and Agricultural Cooperatives (BAAC) did not violate any law.

GSB's board of directors on Tuesday also cancelled the Bt20-billion loan to the BAAC and agreed to pull back a previous loan of Bt5 billion. It will ask the BAAC to respond to a report that it would have used the loan to pay farmers who are in arrears under the rice-subsidy programme.

Amnuay revealed that on Tuesday, a total of Bt10.8 billion had been deposited at the BAAC and Bt38 billion withdrawn. The day before, Bt10 billion was deposited and Bt30 billion pulled out. That adds up to a net capital outflow for February 17-18 of Bt48 billion. The bank's liquidity before the rash of withdrawals was set at Bt200 billion.

However, he also said the bank had enough cash on hand in case customers still wanted to withdraw their money.

GSB Trade Union president Likhit Klinthanom said the board should issue a written apology to its customers and employees to take responsibility for the current crisis of confidence, and urged the directors to promise to avoid direct or indirect involvement with politics in the future.

He said the situation did not require GSB board members to resign but they should certainly apologise. He warned the board that if in the future it insisted on providing a similar type of loan to the government, the trade union would stage a protest.

The recent run on GSB accounts highlighted the potential political risk to the Thai financial system, according to Fitch Ratings, but it believes that the state banks are resilient enough to cope with such shifts of deposits.

According to Fitch, GSB's liquidity buffers, as well as the scope for policy-driven financial support from the central bank or from other state-owned institutions, should enable it to surmount any limited, near-term funding challenges.

GSB and BAAC are both backed by acts of Parliament, and are likely to obtain high levels of support, the rating agency said. As of last June, they accounted for 10.6 per cent and 6.1 per cent respectively of banking-system assets.

Fitch said the account withdrawals from GSB appeared to be of a manageable size, since the bank reported that the net amount of the pull-out was around Bt48 billion during Monday and Tuesday, while its total deposit base was Bt1.724 trillion as of last August.

The one key risk from this deposit shift is an acceleration of withdrawals from other state-owned banks, which could place an increasing burden on inter-bank credit lines, and potentially the central bank itself, Fitch said.

It further noted that the withdrawals were related to public scepticism over GSB's new Bt20-billion credit line to the BAAC in support of the rice-subsidy programme, and were motivated by the political situation rather than heightened financial risk.

However, systemic risks are skewed to the downside, as a resolution of the political deadlock is not in sight, and the funding of the rice programme remains uncertain.


-- The Nation 2014-02-20

[NongKhaiKid]

Self-inflicted injury and the man who started it will still hold the post for 30 days.

[bushwacker]

Great article! Little to no new information and leaving the reader with more questions than answers.

Thailand the hub of clear information!

[MaxLee]

A MEMBER of the Government Savings Bank board said yesterday that he hoped the bank's deposit and withdrawal situation would return to normal after GSB president Woravit Chailimpamontri tendered his resignation on Tuesday.

No problem, the Pheu Thai goonies checked in, and another Thaksin cronie will take over the job on Mr. Worawit's behalf,..

... wanna bet???

[Scamper]

The public has a right to know that their money is safe. In the end, it is the very customers of this bank that spoke more loudly than any could have imagined. It was a shout so loud Kittirat had to block his ears. He knows that shout means only one thing - the people will not allow their own money to be put at risk. The people have had it with Kittirat and his manipulations.

Edited February 20, 2014 by Scamper

[telecom]

So when 30 days expires, if the dust has settled, he will withdraw his resignation.

Resign now if you really mean it.

[robblok]

The guy was a red shirt supporter (claimed by my Thai anti government friends). They told me that everyone told him this would happen but he still went ahead. The employees were against it but he still did it.. The result... this drama. Thing is he will find an other high paid job as he is a PTP friend. But the poor employees of the bank would have had a much harder time if it had gone even more wrong. So his resignation means nothing I am sure an other job will be arranged soon by his PTP friends. I doubt the same would have been done for the poor employees had it gone wrong. No wonder they did not agree with this.

But this sends a good signal to other banks, mess with this and get burned. Finally the people with money can speak their votes might be less but their money outnumbers that of the PTP who of course would not risk it. Though I heard the money that was deposited was by PTP bigshots. But i doubt they would face a risk as if real problems arose they would get their money back first.

[siampolee]

Perhaps some of us who were here in 1997 can see some interesting similarities twixt the gutting of a bank and the financial system then by a Shinwatra and his cronies and this currently developing situation.

Some of the names have changed but the star player and a number of his supporting cast are the same in this current financial black comedy.

Edited February 20, 2014 by siampolee

[rickirs]

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The public has a right to know that their money is safe. In the end, it is the very customers of this bank that spoke more loudly than any could have imagined. It was a shout so loud Kittirat had to block his ears. He knows that shout means only one thing - the people will not allow their own money to be put at risk. The people have had it with Kittirat and his manipulations.

Depositor funds are guaranteed like the US FDIC up to a very high limit. There is no risk of loss. It is from certificate of deposits and bank profits that the bank finances business capital requirements.