Until recently Bangkok Bank offered 4, 10 and 15 month fixed deposit accounts with a minimum deposit of 200,000 Baht. The interest rates were significantly better than the standard maturities. The 15 month account disappeared a couple of months ago or thereabouts. Now the 10 month account is no longer available. Can anyone explain what's happening? Is it that future interest rates are so unpredictable given the current political situation?

The fixed interest rates offered by individual banks is linked to the BOT base lending rate, that was reduced to just 2% about ten days ago - over the course of the last year or so, BOT rates have fallen from 3% to their current levels. BOT lowers or raises the base rate based on the needs of the economy, if the desire is to stimulate growth, rates get lowered hence people are tempted to borrow more. If inflation is starting to bite, BOT will raise the base rate which means people will borrow less.

Individual bank interest/deposit rates are linked to the BOT base rate, albeit if an individual bank really needs customer deposits it may offer a higher rate than what BOT has set, we've seen a lot of that over the past year or so but now the party seems to have ended. The future is that Thai interest rates will rise but not until the political mess has been sorted and the economy has begun to recover, it could be a painfully long wait.

Numerous Bangkok Bank Fixed savings accounts are still available. It's just any particular maturity period may be on promotion for a few weeks/months at a higher than its normal rate....and in some cases it may no longer be available at all/at any interest rate after the promotion period ends. Those promotions come and go every few months. See this Link for Bangkok Bank's current fixed account rates.

At this particular point in time in appears the only fixed account Bangkok Bank has on promotion is their 4 month fixed account. You can also still open a fixed account for say 6, 12, 24, 36 months...it's just the 6, 12, 24, and 36 month fixed accounts are not on promotion right now at a higher than their normal rate.

Numerous Bangkok Bank Fixed savings accounts are still available. It's just any particular maturity period may be on promotion for a few weeks/months at a higher than its normal rate....and in some cases it may no longer be available at all/at any interest rate after the promotion period ends. Those promotions come and go every few months. See this Link for Bangkok Bank's current fixed account rates.

At this particular point in time in appears the only fixed account Bangkok Bank has on promotion is their 4 month fixed account. You can also still open a fixed account for say 6, 12, 24, 36 months...it's just the 6, 12, 24, and 36 month fixed accounts are not on promotion right now at a higher than their normal rate.

That doesn't explain why the accounts with better rates (and higher minimum deposit) have been withdrawn. The 10 and 15 month accounts have previously been available for several years.

The decision speaks to withdraw these accounts speaks to the bank's concerns about future interest rates and/or excess liquidity. I'd like to understand what those issues are.

Perhaps BKB is a bellwether. Others are still offering products several ticks above BOT's base rate. I'm happy with 2.35% instant for now to see what's going to happen as US eases QE (impact on Baht) and Thailand reduces expected growth, continuing political issues, etc.

Edited March 23, 201412 yr by 55Jay

When a bank issues a fixed rate offer, it typically has a total value, for the sake of this example let's say Bangkok Bank offers a ten month fix at 3%, that product will have a maximum capacity which we'll say is THB 50 million. When sufficient numbers of customers have subscribed to that product and the THB 50 million maximum capacity has been reached, the product will be withdrawn. The reason why the banks set a maximum capacity is because in designing the product at the outset they will buy a corresponding interest rate swap (today's variable for a fixed rate for a fixed term) to ensure they don't loose money when rates fall, it's not good banking business to be paying 3% when the base rate is 2%, unless you've somehow offset that risk via a swap.

So, Bangkok Bank has withdrawn all their previous products and are now issuing new ones in line with the new BOT base rate and in line with whatever swaps they are able to buy,

.

I haven't had a fixed acc.with bkk.bank since jan.2013 they have been below most banks eg.scb.tgsb.and lately land and houses.

I suppose they have plenty in the coffers to lend,untill that goes down so will any decent rates.

Probably down to liquidity.

The odd maturities and promotional rates help raise additional liquidity for banks.

Most banks have shown little or no loan growth in the first two months of the year. Hence less need for additional deposits and less need to run promotions to generate additional liquidity.

Put another way not much point paying promotional rates when there s not much to do with the proceeds.

Cheers

Fletch

Sent from my GT-I9152 using Thaivisa Connect Thailand mobile app

The report from KGI yesterday at the link below pretty much confirms what I wrote above.

http://research.kgieworld.co.th/recom.nsf/0/99A89AD5010D0C0447257CA700046584/$file/Daily+Story_Banking_2014_03_26_e_th.pdf

The sector’s loan growth was 0.0% MoM, +8.4% YoY, and -0.0%

YTD in February. Loan repayment and slow new lending were the

two key reasons for flat loan growth in February and YTD.

Slowdown was seen from each and every segment, especially the

retail segment where loan repayment came in greater than new

lending at almost all banks under our coverage.

Funding-wise, we didn’t see much price competition in fixed-rate

products but spotted some competition in special CASA accounts,

either with higher rates or fee-waived features, usually offered by

small banks, in a bid to increase their transactional deposit accounts

and boost their fee income to offset the slow lending demand.

Flat loan growth, small deposit growth, increased liquidity (e.g loan/deposit ratios decreasing)

Seasonally it's not a good time for deposit rates either, accentuated by the political situation and rate cut.

Best you can do is look out for promotional rates...

Cheers

Fletch