Thailand triumphs in UN Human Rights council bid

[ThaiLife]

Can some one please explain how this government deposit protection works, and I don't understand why the coverage amounts vary - 50 Million down to 1 Million Baht

LINK

http://www.dpa.or.th/main.php?filename=index___EN

Thanks

TL

[Pib]

Basically that's the amount of govt coverage for your various accounts at each bank. If you had one or several accounts at a bank in case of the bank's failure the govt would reimburse up to X-amount as shown in the time frame chart. Anything over the amount shown in the chart above would only possibly be reimbursed from the bank liquidation process. Key to point out the "at each bank" part...I don't mean "at each branch of a particular bank." So, if you had all your money with one bank, say Kasikorn Bank just for example, but had accounts at multiple Kasikorn branches, well the coverage max applies to aggregate amount of all the accounts you have at that bank's various branches.

Now this is max coverage "by bank" so it's better not to have all you money at only bank X (say Bangkok Bank just for example)... in order to have more coverage, better to have some accounts at bank Y (say Krungsri Bank just for example) also. That way you would have a total of 2 million baht in total coverage come 11 Aug 16. 1 million coverage at Bangkok Bank and 1 million coverage at Krungsri Bank.

So, let's fast forward to 11 Aug 16 when the coverage drops to 1 million baht. That 1 million baht would be the max coverage provided for the one or multiple accounts you have a bank X. Say you had multiple accounts totaling 3 million baht at that bank X like maybe a regular savings account and a couple of fixed accounts, only 1 million of that 3 million would be reimbursed by the govt...and additional reimbursement would only possibly come after the liquidation process/bank assets were sold off.

Now 1 million baht (approx 32K USD) is not much in minds of most farangs, but keep in mind when looking at the Thai population as a whole the great majority of Thais will not have 1 million baht in the bank...so 1 million coverage amount is adequate. Heck, I expect the great majority of farangs in Thailand don't have 1 million baht in Thai banks based on ThaiVisa posts.

The DPA amounts have been extended a couple times already and it wouldn't surprise me to see the amounts and dates change again, especially the 11 Aug 16 date when coverage drops to 1 million baht...my guess is that date will be pushed out again. Only time will tell.

[ThaiLife]

Basically that's the amount of govt coverage for your various accounts at each bank. If you had one or several accounts at a bank in case of the bank's failure the govt would reimburse up to X-amount as shown in the time frame chart. Anything over the amount shown in the chart above would only possibly be reimbursed from the bank liquidation process. Key to point out the "at each bank" part...I don't mean "at each branch of a particular bank." So, if you had all your money with one bank, say Kasikorn Bank just for example, but had accounts at multiple Kasikorn branches, well the coverage max applies to aggregate amount of all the accounts you have at that bank's various branches.

Now this is max coverage "by bank" so it's better not to have all you money at only bank X (say Bangkok Bank just for example)... in order to have more coverage, better to have some accounts at bank Y (say Krungsri Bank just for example) also. That way you would have a total of 2 million baht in total coverage come 11 Aug 16. 1 million coverage at Bangkok Bank and 1 million coverage at Krungsri Bank.

So, let's fast forward to 11 Aug 16 when the coverage drops to 1 million baht. That 1 million baht would be the max coverage provided for the one or multiple accounts you have a bank X. Say you had multiple accounts totaling 3 million baht at that bank X like maybe a regular savings account and a couple of fixed accounts, only 1 million of that 3 million would be reimbursed by the govt...and additional reimbursement would only possibly come after the liquidation process/bank assets were sold off.

Now 1 million baht (approx 32K USD) is not much in minds of most farangs, but keep in mind when looking at the Thai population as a whole the great majority of Thais will not have 1 million baht in the bank...so 1 million coverage amount is adequate. Heck, I expect the great majority of farangs in Thailand don't have 1 million baht in Thai banks based on ThaiVisa posts.

The DPA amounts have been extended a couple times already and it wouldn't surprise me to see the amounts and dates change again, especially the 11 Aug 16 date when coverage drops to 1 million baht...my guess is that date will be pushed out again. Only time will tell.

Thanks for that easy to understand explanation

I have a friend here in Thailand who has all his money in a Thai bank and after the recent coup he was / is concerned that some how banks could become more unstable and he could some how loose all his money . Is he worrying too much ?

TL

[AyG]

I have a friend here in Thailand who has all his money in a Thai bank and after the recent coup he was / is concerned that some how banks could become more unstable and he could some how loose all his money . Is he worrying too much ?

I very much doubt a bank would be allowed to fail. In practice the authorities would force its merger with another bank.

I also rather suspect that the guarantee levels won't go down to 1 million, but will remain much higher.

[Pib]

Heck, I think the recent coup make the economy and financial system more stable (not to imply having a military coup every half dozen or so years is the way to run a country).

[Pib]

I very much doubt a bank would be allowed to fail. In practice the authorities would force its merger with another bank.

That's basically what happens in the U.S. when a bank fails...the bank is almost always "acquired" by another bank with the government's assistance. Now there are around 6,800 banks unions in the U.S. and that's just the banks....we are not talking how many branches those 6,800 banks may consist of....count the branches and you are into the tens of thousands. Each year some of these banks fail and almost every time they are immediately acquired by another bank and deposits didn't lose a penny...customers just got nervous for a few days when the bank failure was announced.

In this Wikipedia article on U.S. bank failures since 2008 take a look at the column "Acquired By" which shows the bank that acquired the failed bank...and in that same column you will see just a few entries where the bank was not acquired by another bank and the govt Federal Deposit Insurance Cooperation (FDIC) stepped in and paid depositors directly. Of course trying to compare the U.S. banking system, which is the largest banking system in the world, with the much smaller Thailand banking system is like comparing night and day.

Edited August 22, 2014 by Pib

[AyG]

One account of what the BoT will do to save a failing bank: http://www.nationmultimedia.com/2009/10/31/business/business_30115601.php

[Pib]

One account of what the BoT will do to save a failing bank: http://www.nationmultimedia.com/2009/10/31/business/business_30115601.php

Wow...that's quite a story...thanks. A couple of statements in the news story really caught my eye like how the Bank of Thailand let the Bangkok Bank of Commerce (BBC) reach the point of having almost 100% of its loans in NPL status before intervening. That's kinda like deciding to buckle your seat belt after your car drives off the cliff.

The central bank ended up losing Bt120 billion in the bail-out for BBC, whose non-performing loans stood at almost 100 per cent.