Anyone lived through Tom yam kung 1997 crash?

[mataleo]

Anyone lived through Tom yam kung 1997 crash?

Can you tell me how was it like?

I know many thais lost fortunes.

Is it many made fortunes on it? And how

What was all that about...

Thx

[Old Man River]

Anyone lived through Tom yam kung 1997 crash?

Can you tell me how was it like?

I know many thais lost fortunes.

Is it many made fortunes on it? And how

What was all that about...

Thx

Google Thanong's series of articles "Mini Crises of 1997." They were in the Nation.

[Showbags]

I arrived in the middle of it......glorious times.....but not so much for others....swings n roundabouts..

[paddyjenkins]

This was the Asian Crisis. Thailand triggered it but it spread across the whole of Asia and emerging markets. Like most crashes, it was caused by excess borrowing and chasing asset prices ever higher, paying higher and higher prices for property and stocks until the pyramid toppled. Yes, many "fortunes" were lost, just as these "fortunes" were "made" in the first place, simply leveraged functions of asset prices based on massively excessive borrowing. And for a few, who foresaw the crash and sold short, or understood the crash and picked up cheap assets afterwards, fortunes were made. As usual, the stupid, the greedy and the gullible lost and the smart and patient won.

[saakura]

I lived through it and absolutely benefitted from it as my salary was in usd. But i could see misery all around as businesses collapsed and people lost jobs. And looking around today at the way Thailand and thais are recklessly spending way beyond their means, i feel that a similar crisis is impending in 5-10yrs if they dont take precautions. So you may still have a chance in case you missed the earlier one.

[rayongchelsea]

This was the Asian Crisis. Thailand triggered it but it spread across the whole of Asia and emerging markets. Like most crashes, it was caused by excess borrowing and chasing asset prices ever higher, paying higher and higher prices for property and stocks until the pyramid toppled. Yes, many "fortunes" were lost, just as these "fortunes" were "made" in the first place, simply leveraged functions of asset prices based on massively excessive borrowing. And for a few, who foresaw the crash and sold short, or understood the crash and picked up cheap assets afterwards, fortunes were made. As usual, the stupid, the greedy and the gullible lost and the smart and patient won.

Were you actually here..what you said above is complete nonsense. I was working for a large multi national at the time..their budget forecasts was constant growth.

Middle class and lower were devastated .

The door to door guy selling dim dum was a director of one of those many finance companies that went bust.

Buying wasn't an option..no one was selling it was a complete psychological nightmare for many. I was looking. The best time was just before taksin came in that was 4 years later!

The only guys who made money were like my colleagues family who were in the know and transferred their assets out and then back in made 50m in a few weeks on fx - regardless of fx rules in place.

The average guy was screwed had no chance, Infact he was encouraged to buy into prosperity. Thailand had never experience credit expansion like this before.

When people ask me about Thailand I always separate before the crisis and after. It was a happier more laid back country before. Then amazing Thailand and mass tourism came....and the outward distrust of foreigners ( thanks to the IMF) surfaced.

I accept that the property markets and shares were in a bubble but to predict there would be a floating of the currency etc..and the extremes that happened.

Nothing to do with stupidity, it's is as always the elites that prospered.In that sense nothing has changed.

[greenfox]

Many old men with small government pensions moved over here post TYG crisis. 70thb+ to the pound.

Now they are 10-15 years older and their pension, if they can still get it, has lost all the value it had, down to the high 40's for a few years while the CoL has doubled.

[worgeordie]

A family of business people next door to me,borrowed a Million dollars,they did not

invest it into the business but shared it among themselves,bought property and

invested in stocks and shares.then the crash hit,people were doing crazy things then,

like the Tulip bulb crash and the South Seas bubble, all driven by greed and the

thought of easy money,yes it will happen again,because of greed and the fact that

people never learn.

regards worgeordie

[Maestro]

Removed some off-topic posts and the replies to them.

[paddyjenkins]

This was the Asian Crisis. Thailand triggered it but it spread across the whole of Asia and emerging markets. Like most crashes, it was caused by excess borrowing and chasing asset prices ever higher, paying higher and higher prices for property and stocks until the pyramid toppled. Yes, many "fortunes" were lost, just as these "fortunes" were "made" in the first place, simply leveraged functions of asset prices based on massively excessive borrowing. And for a few, who foresaw the crash and sold short, or understood the crash and picked up cheap assets afterwards, fortunes were made. As usual, the stupid, the greedy and the gullible lost and the smart and patient won.

Were you actually here..what you said above is complete nonsense. I was working for a large multi national at the time..their budget forecasts was constant growth.

Middle class and lower were devastated .

The door to door guy selling dim dum was a director of one of those many finance companies that went bust.

Buying wasn't an option..no one was selling it was a complete psychological nightmare for many. I was looking. The best time was just before taksin came in that was 4 years later!

The only guys who made money were like my colleagues family who were in the know and transferred their assets out and then back in made 50m in a few weeks on fx - regardless of fx rules in place.

The average guy was screwed had no chance, Infact he was encouraged to buy into prosperity. Thailand had never experience credit expansion like this before.

When people ask me about Thailand I always separate before the crisis and after. It was a happier more laid back country before. Then amazing Thailand and mass tourism came....and the outward distrust of foreigners ( thanks to the IMF) surfaced.

I accept that the property markets and shares were in a bubble but to predict there would be a floating of the currency etc..and the extremes that happened.

Nothing to do with stupidity, it's is as always the elites that prospered.In that sense nothing has changed.

Why would I need to have been living there to know what it was?

Thailand was massively overextended on debt, especially foreign borrowings. It had almost no foreign reserves and lacked the strength to maintain its currency peg to the $US dollar. Real estate and stocks had become one huge bubble, fed by excess debt and excess greed, the Hall marks of all bubble. Speculative attacks on its currency led to a currency crisis and burst its bubble. That then spread to other countries.

The current situation reminds me a little of the pre 1997 scenario. True, the currency partially floats now, and the country has more in foreign reserves. But a culture of debt has re emerged, too many thais appear to be trading stocks again, the real estate market looks like a bubble to me, and the level of confidence seems overdone.

[thailiketoo]

Why would I need to have been living there to know what it was?

Thailand was massively overextended on debt, especially foreign borrowings. It had almost no foreign reserves and lacked the strength to maintain its currency peg to the $US dollar. Real estate and stocks had become one huge bubble, fed by excess debt and excess greed, the Hall marks of all bubble. Speculative attacks on its currency led to a currency crisis and burst its bubble. That then spread to other countries.

The current situation reminds me a little of the pre 1997 scenario. True, the currency partially floats now, and the country has more in foreign reserves. But a culture of debt has re emerged, too many thais appear to be trading stocks again, the real estate market looks like a bubble to me, and the level of confidence seems overdone.

What part of the currency does not float? What does the the current situation have in common with what happened in 1997?

[GuestHouse]

I was living and working in Thailand right through the 90s my observations as follows:

In the couple of years before the crash the economy was showing clear signs of overheating, the Thai middle class where spending money like water.

I and my expat colleagues where all on full MNC expat deals, on very respectable sterling/dollar salaries with added extremely generous local allowances. That's not a boast, but a point of reference, setting the scene for an observation.

Despite our privileged position and income it was almost always the case that when dining out, we and our expat friends would find ourselves surrounded by groups of Thai people enjoying extravagance beyond what we would want to spend for.

We might have a bottle or even two bottles of wine, we might have one very nice dish and a few side orders - but in that pre-cash time the big spenders in the restaurants where the Thai people - It was common place to see large tables surrounded by Thais ordering seemingly every thing on the menu, bottles (and I mean many bottles) of imported whisky.

They rolled up in red plated cars, designer goods, watches the whole conspicuous consumption thing on a scale I have not since seen.

Nor was it simply the very wealthy, middle class Thai people, ordinary working class Thai people, they were spending with no thought for tomorrow.

The change wrought by this money was everywhere, most conspicuously on the roads - before 1992~3 the vehicles on the road could be classified as motorbikes (for most ordinary Thai people), pick-ups for the middle class and farmers (almost every vehicle was a pick-up) and saloons for Taxis and the wealthy - I am my colleagues drove 2 litre Toyota Coronas, almost without exception every other private saloon car on the road was a Merc.

Its a generalisation, but one that was pretty accurate that Thai people bought Motorbikes and Pick-ups, if the bought a saloon they bought a Merc.

In the mid 90s all that changed, huge amounts of money were being borrowed to buy saloons.

The very first time I heard any suggestion that all this was going to end in disaster was when driving up to Sukhothai with my wife - we were stopped at a cross roads in the middle of nowhere, she looked across at a row of shop houses being built, next to another row of empty shop houses that had been recently completed and said words to the effect of 'Those are not being built to make money - the bill is going to have to be paid soon enough'.

Soon enough was a matter of months later.

And I had just ordered a new car.

[GuestHouse]

As it happens the new car never came, or rather came too late.

The reason being, demand was outstripping supply, so a six month wait for a new car was the norm.

Then it hit.

The historical record (written outside of Thailand) tells us that the Bank of Thailand had been for some time issuing warnings, this had been noticed by two sets of people, the international banks/money market investors and the Thai political elite.

The important issue to understand is that the Thai Bht was at that time pegged to the $.

In the weeks before the crash, huge amounts of Bht was being transferred out of Thailand by Thailand's politicians (and others) - this was noticed - The then PM Chavalit Yongchaiyudh was reported at the time to have bought vast sums of $, if true he was by no means alone in his sudden eagerness to invest in hard currencies.

I myself saw a middle aged Thai woman on a flight to London shamelessly unload wads of $ from her clothing and it in her hand luggage. She perhaps thought it a display of wealth for the other passengers.

It is these signals that the international investors picked up on. Then the crash came.

http://www.nationmultimedia.com/2007/07/02/national/national_30038909.php

Over a matter of days, the whole consumption disappeared.

There was a brief moment, perhaps a couple of weeks when it was truly glorious to hold hard currency. The very best hotels, the best restaurants, anything someone holding foreign currency wanted for prices at a third or a quarter of what they had been.

That car I was buying, it had not turned up in time and month or so before the crash I had given up hope and got my deposit back.

I now went out and bought the car I wanted at another dealer for a price 1/3rd of what I had previously bargained on.

A matter of days later, the original dealer turned up with a car desperately telling me this is the car I had ordered. I truly felt sorry for the guy.

It might have been that, but certainly similar incidents that took the misplaced joy, I and many others, where getting out of the crash.

Bangkok and all the major towns around the sour central commercial and industrial areas emptied, and I mean emptied.

At that time I made regular trips to visit parts of the country, all points of the compass. The roads where packed for weeks with pick-up trucks loaded up with household goods. Unemployed Thai people heading back to the farm. (More on that later).

If you picture it, Siam square was any day of the week nearly empty of cars, empty shopping stores, empty restaurants, I drove one evening from Siam to Soi 18 Sukhumvit without passing or being passed by one other car.

And of course there was real human misery, and as ever people happy to abuse those who where suffering.

Edited November 8, 2014 by GuestHouse

[GuestHouse]

I had a friend called 'Eve', bright, articulate, well educated, hard working, good looking and earning a good salary.

The crash came she lost her job and was like everyone else desperate for an income. Apart from all the things above, which many have, she had two other assets. She owned her home outright (didn't trust banks) and she spoke excellent English - she was extremely employable under normal circumstances, and free to some extent of the desperate need for money - she could get by on a pittance.

Which was just as well because she her months to find a job, months in which she had not once, but on several occasions interviews where the job offer was subject to acceptance of a second interview at a nearby hotel, or an agreement that a percentage of her prospective wage would be paid to the HR manager.

She had the choice not to take these offers, many did not.

I witnessed on dozens of occasions, Thai people turning to prostitution for money. Once while crossing the road on Sukhumvit I had a young man approach me offering his girlfriend (a 19 or 20 year old college student) for the rate for the evening.

I woman called at my house, pleasing and begging me to take her on as a maid.

A young man stopped me in the street to beg some money off me, I recognised him as a waiter in my favourite restaurant - laid off an now destitute.

At a filling station I noticed the staff discussing someone outside, a man 50 years old sitting on a kerb, he looked tired and hungry. I went out and spoke to him, his thick isaarn accent difficult for me to understand. He'd come looking for work. I went back in the store, bought him food and water, gave it him with Bht 500 and told him to go back home to his family. What did he do, I don't know.

These where the people paying the price that my wife had noted must be paid.

I. like many, never refused a beggar, bought meals for people, I saw too Thai people, themselves in a desperate position giving food or meals to people.

And its then they came flush with their money.

[GuestHouse]

Up and until the crash there had been very few expats living in Thailand, those that did where in general people who had a real affinity with the place, I'm not saying there was non of the trash that washes up these days, but there was a lot less of it.

The crash brought the hoards, the guys and girls, who might otherwise have gone to Benidorm or the Costa Del Sol, it brought too the property developers and with these people the change of relationship between Thai people and foreigners.

It wasn't simply the foreigners, the Thai political elite had turned to nationalism, blaming George Soros and the IMF for Thailand's problems. For the very first time I came across open anti foreigner sentiment - It was Thaksin and his nationalists that fostered this. \

The foreigners did not help the situation, everything was cheap and they thought the Thai people cheap too, cheap and expendable.

I recall that on many occasions during the early 90s I would go out get drunk and wake up in the morning to discover I'd forgotten my brief case, my jacket and wallet, on one occasion a camera back stuffed full of cameras and lenses - left in the bar.

These things where always kept for me un touched until I got back.

I recall too the bar owner telling me to pay my bill tomorrow, you are too drunk.

Service everywhere was polite, foreigners where everywhere treated with respect - I'm not saying I liked the Thai people to be servile, I did not, but they were almost always polite.

Exposure to the worst of what foreigners could throw at them changed all that - and again in background nationalism.

I witnessed in that time my first fight between a Thai person and a foreigner. I heard for the first time the argument you can pay because your money is strong.

The hotels switched their prices to $ (while paying their staff and services Bht).

Greed took hold.

But the economy did improve - I would argue with anyone that the reason the economy improved was because of the structural changes made to the economy by PM Chuangleekpai.

The banks could now sell frozen debt assets ( I any many others bought) the economy improved still further and the Bht started to recover.

By the early 2000s things were on the mend, by the mid to late 2000s the economy was in full power again, full employment for Thai people and tens of thousands of foreigners who sold their life into Thailand at Bht75/£ now struggling - ThaiVisa was daily inundated by expats desperately telling themselves and each other that the rates would improve.

The pick-up trucks had returned from the farm and exchanged for saloons - Expats where now under financial pressure from the strengthening Bht and their weakening home economy.

A second windfall came by, expat fire sales, cars, houses and condos at rock bottom prices.

The economic wheel had turned and life in Thailand was never going to be the same.

The big change and the change that really matters is what happened to the farm.

The period between 1997 and now has seen a massive movement of land ownership from cash poor land rich farmers to the businessmen and speculators in the urban centres.

That 1997 exodus back to the safety and sustainable existence on the farm cannot happen again.

The farm has been sold, or taken in exchange for debt.

[stat088]

I remember the Bangkok skyline with all the unfinished buildings and the cranes perched on top. "Ghost Buildings".

[CaptHaddock]

The claim that the Tom Yum Goong Crisis was due to "greed" is as vacuous as saying that airplane crashes are caused by gravity. People are always greedy, but don't always have the same opportunities to take risk. The eyewitness accounts of the effect of the crash are very interesting, but you can't understand how the crisis came about by recounting tales of executives turned overnight into sandwich-makers.

During the 80's Thailand's economy grew rapidly from the growth of manufacturing funded largely by Japan's trade surplus, the same surplus that would create an asset bubble in Japan (stocks and housing) whose popping in 1989-1990 caused damage to the Japanese economy from which it has yet to recover. Some of the trade surplus came into Thailand which devalued the baht several times and then was indirectly devalued by devaluation of the dollar (to which it was substantially pegged) from the Plaza Accords in 1985. This monetary agreement drove the Japanese zen up in value at the same time that it drove the baht down. The result was to make Thailand an even more attractive destination for Japanese investment since the costs of doing business dropped while the ability to export increased. So, Thailand is growing at a spectacular average annual rate of more than 9% in this period. But Thailand still has a trade deficit and therefore a need for incoming capital to fund its trade deficit. The Chuan Leekpai government attempts to address the need for increased foreign capital by permitting banks to borrow in foreign currency and lend in baht. This is where the alarm bells might have gone off. Having large debts in a foreign currency exposes the economy to enormous exchange rate risk of the kind that subsequently would devastate economies like Mexico in 1994, Argentina in 2001 and Greece from 2010 on. But Argentina and Greece at least were crises of public debt while the problem in Thailand was private debt. (This Chuan Leekpai government should be remembered for several reasons: it came to power in 1992 in the last election the royalist Democratic Party would win, but Chuan would have to dissolve Parliament and call elections because of the blatant corruption scandals of Suthep Thaugsuban, more recently the anti-democratic rabble-rouser calling for an end to elections in order to reform against "corruption.")

So, the big Bangkok banks are now running up debts in dollars which they lend out in baht domestically. However, unlike in the 80's the incoming foreign capital was not mostly used to make productive investments in manufacturing, but to fuel asset bubbles in stocks and housing. The level of hot capital entering the Thai economy drives up the value of the Thai baht. Currency speculators like George Soros recognized the unsustainability of the Thai baht and shorted it heavily, which hastened, but did not create, the crisis. The Bank of Thailand spent a large percentage of its foreign currency trying to prop up the value of the baht, but the effort eventually failed and the baht was allowed to float. Its value dropped immediately and substantially putting the foreign currency debtors such as every one of the major Thai banks into a crisis of default. The domestic loans of the banks were frequently collateralized by inflated real estate, just as it was in Japan in the early 90's and in the US in the mid 2000's. I understand that American banks then bought substantial interests in the major Thai banks at discount prices by supplying the dollars they critically needed to meet their debt obligations. Then the housing and stock market bubbles burst causing the devastation for which others have provided first-hand accounts.

So, asset bubbles always burst. They are caused by credit bubbles which themselves arise from trade imbalances. The change in the psychology of market participants is more an effect than a cause, but there is a feedback loop, of course. Greed itself doesn't explain anything because people are more or less always greedy. The US housing bubble, whose bursting caused the global crisis of 2008, arose because of cheap loans, not a sudden inexplicable increase in human greed. My generation of Americans who bought homes in the 80's and 90's had to make substantial down payments of 20% or more in most cases. By 2007 people were, for the first time in US history, able to buy a house without putting any money down. So, naturally they were ready to speculate.

The monetary history of the 1997 crisis is the reason that the Thai baht is not fully convertible and the reason that many countries including Thailand have accumulated substantial dollar reserves as self-insurance against a repetition of those events.

[mexxx]

& another thing that lulled the farangs into a lord of the manor mentality was the ultra high interest rates for baht deposits, at 1 point reaching 50% but only for a short time. these old age farang pensioners were getting extraordinary exchange rates on their farang currencies & depositing with thai banks.

winning on 2 fronts. nearly as good as winning the lottery.

i remember the harley davidsons & pretend harleys being ridden around pattaya by old guys with long grey hairs & wearing nazi helmets with a teen on the back, living in ridiculously cheap luxury condos. many had multiple teens on the trot.

the bar ownership scene back then exploded with all manner of farangs coming from far & wide to live the dream.

nothing it seemed was out of reach for those old sexpats.

[TallGuyJohninBKK]

Interesting posts and perspectives of history.

One thing I've always wondered about is what happened to farangs who had deposits in the several Thai banks that failed at the time?

Did they get their deposits back, and how long did it take???

At that time, there was no government-backed deposit protection program like exists now. In fact, the aftermath of that crash is what led to today's government backed protection for bank deposits -- against financial failure of the bank only, not any other kinds of misdeeds.

[thailiketoo]

& another thing that lulled the farangs into a lord of the manor mentality was the ultra high interest rates for baht deposits, at 1 point reaching 50% but only for a short time. these old age farang pensioners were getting extraordinary exchange rates on their farang currencies & depositing with thai banks.

winning on 2 fronts. nearly as good as winning the lottery.

i remember the harley davidsons & pretend harleys being ridden around pattaya by old guys with long grey hairs & wearing nazi helmets with a teen on the back, living in ridiculously cheap luxury condos. many had multiple teens on the trot.

the bar ownership scene back then exploded with all manner of farangs coming from far & wide to live the dream.

nothing it seemed was out of reach for those old sexpats.

I believe the highest interest rate was slightly over 24% and did not last long. Tell me what is the good in earning a high rate if your money was in baht at 56 to the US dollar? If your money was in dollars all good but as soon as you exchanged it not good.

You take an old guy with a $2000 pension and the exchange gave him $4000 dollars hardly enough to buy a Harley. Having been in Pattaya shortly after the crisis I can report less than 1% of the old fellows rode around on Harleys.

I'll admit it was easier living on the high exchange rate but not an earth changing experience.

10 years ago the exchange was 45 to the dollar now it's 33; sure a difference but not enough to bring in or chase out millions of old fellows. Far more of an impact on Pattaya was the Russians and Chinese getting more cash and coming as opposed to the Western men getting less money and leaving.

Pattaya has changed a lot with many more shopping areas attracting many more Thai people from Bangkok on the weekends. I never did notice a large presence of Harley drivers in Bangkok.

[ezzra]

Been here in 1987 and when that crash came I didn't have enough resources to take advantage of it,

there was this one rai of vacant land next to my condo in mid Sukhumvit repossessed by the bank,

they wanted than 40 millions, now it's worth stupid amount of money, like 20 times more...

[thailiketoo]

Interesting posts and perspectives of history.

One thing I've always wondered about is what happened to farangs who had deposits in the several Thai banks that failed at the time?

Did they get their deposits back, and how long did it take???

At that time, there was no government-backed deposit protection program like exists now. In fact, the aftermath of that crash is what led to today's government backed protection for bank deposits -- against financial failure of the bank only, not any other kinds of misdeeds.

In 1997, a number of banks, including Siam City bank, failed as part of the regional economic crisis of the time. The government responded by nationalizing the banks. When this happens, normally deposits are protected. Other than Siam City I don't think any other large banks failed. Correct me If I'm wrong.

[Old Man River]

A family of business people next door to me,borrowed a Million dollars,they did not

invest it into the business but shared it among themselves,bought property and

invested in stocks and shares.then the crash hit,people were doing crazy things then,

like the Tulip bulb crash and the South Seas bubble, all driven by greed and the

thought of easy money,yes it will happen again,because of greed and the fact that

people never learn.

regards worgeordie

During those times I was in Thailand in the finance industry.

Most Thai corporates borrowed in USD's, despite having THB revenues. Due to the basket, which the THB was tied to, the USD/THB changed little so most ran open positions. USD loans were often short term, even if for long term purposes. They were rolled over indefinitely.

Hedge funds attacked the THB, shorting it (this is fully explained in Thanong's articles). Once the THB was devalued, lenders called back their loans. Corporates with huge amounts in USD loans found their THB revenues worth less and less and were forced into insolvency. In essence, they quickly had close to twice the amount of loans. They defaulted on their loan agreements due to higher leverage ratios than they ever imagined.

Local banks as well as foreign banks were lending in USD's. Banks tried to work out loans, but regardless, banking laws forced them to write off loans (show them as losses). This cut into their own capital adequacy ratios.

Their was a knock on effect, and the Peso weakened quickly and ultimately many other Asian currencies followed suit, leading to similar problems in other countries. In Thailand, local banks greatly tightened up their credit policies and only supported their best clients, trying to keep them from going under. Real estate loans were halted, so those who had started projects couldn't finish them. There were many buildings in Bangkok in various stages of development where construction simply stopped. Many lost their jobs.

Note, when I first came to Thailand several years before the crisis, all I heard was that Thailand was over-built and the bubble would burst soon. It is always what people attribute these things to, when they really don't know. The real estate crash only happened after the currency issues, caused by hedge funds shorting the THB.

As to who could have benefited, certainly the hedge funds. Also, if anyone was tipped off about the devaluation, they could have individually shorted the THB. In addition, a few years later, when bad loans were bundled and sold at deep discounts money was made, but that took time. Finally, while not initially intentional, once the THB had re-stengthened, those who had hedged their USD/THB positions, could have unwound, taken profit out of their in the money swaps, and re-hedged at prevailing rates.

Although none of the companies I worked with got hurt, some really good friends did get hurt and it isn't something I want to experience again.

[TallGuyJohninBKK]

In 1997, a number of banks, including Siam City bank, failed as part of the regional economic crisis of the time. The government responded by nationalizing the banks. When this happens, normally deposits are protected. Other than Siam City I don't think any other large banks failed. Correct me If I'm wrong.

I think you're missing some history, including among others, the illustriously failed Bangkok Bank of Commerce. But my post above was really more about how long it took people in the failed/taken over banks to get their deposits back, which no Thai law at the time mandated, AFAIK. Though the Thai government at the time adopted a policy to protect bank deposits, in part in order to avoid the collapse of the entire banking system.

In past posts here, some folks involved then claimed it took them YEARS (like three to four years) to get their deposits restored. I wasn't here there or involved then, thus that's why I was asking.

Banking sector intervention

The Bank of Thailand was initially reluctant to

intervene in banks since it feared that interventions

could cause a run on the whole banking system and

severely deepen the crisis. With the October 1997

amendments to the Commercial Banking Act, the

Bank of Thailand was given specific powers to

write down capital and change management in troubled

commercial banks. Based on these new powers

on December 31, 1997, the Bank of Thailand intervened

in a medium-sized bank, Bangkok Metropolitan

Bank: management was changed, and the

Bangkok Metropolitan Bank was told that if capital

had not been raised within roughly three weeks, the

Bank of Thailand would order the bank to reduce its

capital and have the Financial Institutions Development

Fund recapitalize it. In the following month,

the Bank of Thailand intervened in two more smaller

medium-sized banks—First Bangkok City Bank

and Siam City Bank. These three banks represented

10 percent of banking system deposits. In mid-May,

the Bank of Thailand intervened in seven finance

companies; the government thus had become the

owner of six banks and nine finance companies,

which accounted for roughly one-third of total

deposits.139

The authorities hired a financial advisor to assist

them with developing a strategy to deal with the

three banks mentioned above and with Bangkok

Bank of Commerce. This financial advisor worked

out an initial proposal for the banks to be absorbed

by either domestic or foreign banks. Meanwhile, in

the course of 1998, these banks’ assets continuously

deteriorated to the point where nonperforming loans

were approaching 70–85 percent in each bank. Although

clearly increasingly insolvent, no decision

was made on how to proceed, since more problems

were emerging and there was an urgent need for the

authorities to work out a comprehensive plan on

how to address other outstanding weaknesses in the

financial sector.

139 In addition to the banks mentioned above, government-owned

banks include Bangkok Bank of Commerce (a private

bank that had earlier failed and been taken over by the Financial

Institutions Development Fund) and Radanasin Bank, a bank and

an associated finance company that was set up by the government

in early 1998 to buy good assets from closed finance companies.

On August 14, 1998, the Bank of Thailand intervened

in all remaining banks and finance companies

considered nonviable. This included two more

banks, one small- and one medium-sized,

and five

finance companies. Subsequently, the authorities decided

to merge three of the intervened banks into the

existing state-owned banks (Krung Thai Bank and

Radanasin Banks), and create a new bank (Bank

Thai), from the merger of Krung Thai Thanakit, one

intervened bank, and the 12 intervened finance companies.

Five banks are now in the process of being privatized

and are expected to be privatized by the end of

1999. In July 1999, one additional small bank was

intervened. The government is supporting the privatization

process through capital injections and by offering

stop-loss guarantees and/or profit and loss

sharing arrangements to potential new investors.

Four of the intervened banks have been closed: one

formally through liquidation, and the other three indirectly

through mergers with state-owned banks.

http://www.imf.org/external/pubs/ft/op/opfinsec/op188.pdf

Edited November 9, 2014 by TallGuyJohninBKK

[thailiketoo]

In 1997, a number of banks, including Siam City bank, failed as part of the regional economic crisis of the time. The government responded by nationalizing the banks. When this happens, normally deposits are protected. Other than Siam City I don't think any other large banks failed. Correct me If I'm wrong.

I think you're missing some history, including among others, the illustriously failed Bangkok Bank of Commerce. But my post above was really more about how long it took people in the failed/taken over banks to get their deposits back, which no Thai law at the time mandated, AFAIK. Though the Thai government at the time adopted a policy to protect bank deposits, in part in order to avoid the collapse of the entire banking system.

In past posts here, some folks involved then claimed it took them YEARS (like three to four years) to get their deposits restored. I wasn't here there or involved then, thus that's why I was asking.

Excuse me for the edit but there were a lot of complete articles quoted and I believe that is not allowed. Anyway I only had one question. Do you know how many banks failed and the depositors did not get money back?

[TallGuyJohninBKK]

No... those were brief excerpts of a much longer IMF report on the Thai banking system and the Asian Meltdown, which I clearly linked to.

All in all, it looks as though a half dozen or so Thai banks disappeared either thru outright closure or being taken over by other banks in the late 1990s.

As for depositors getting their money back, I never said they didn't. I said, others here have posted that it took years for their funds to be released.

Edited November 9, 2014 by TallGuyJohninBKK

[thailiketoo]

No... those were brief excerpts of a much longer IMF report on the Thai banking system and the Asian Meltdown, which I clearly linked to.

All in all, it looks as though a half dozen or so Thai banks disappeared either thru outright closure or being taken over by other banks in the late 1990s.

Defunct or Merged Thai Banks 1.jpg

As for depositors getting their money back, I never said they didn't. I said, others here have posted that it took years for their funds to be released.

1997 Asian Meltdown-Bank deposit frozen 3 years.jpg

I would think that is the crux of the issue in bank failures. How many investors lose their money. If they have to wait they have lost the interest while waiting or maybe not I don't know. But that's what I was asking how many banks failed. By fail I mean fail/go out of business lose all money/ go broke/ disappear and the investors lose all their money?

PS I believe the fair use rule is 3 sentences and a link.

[TallGuyJohninBKK]

In the case of the late 1990s banks, they did FAIL. The prior Thai bank companies and their brands disappeared, and were merged into or taken over by other banks with the considerable financial backing of the Thai government. The depositors may have gotten their money back eventually, but I don't know that the "investors" in those bank companies did.

As for fair use, I was quoting from an IMF public document report, not a private company's news article. Fair use doesn't apply to public documents.

Edited November 9, 2014 by TallGuyJohninBKK

[samran]

I remember in 1996 living out in ramkamhaeng and it taking 2 to 3 hours to drive from Silom to there.

At the start of 98, the roads, while not clear, were much more free flowing and the trip could be done much faster (this was the days before much of the overhead tollways had been built).

Pre 97 was almost like you fired a shotgun randomly into the sky and 20 geese would fall to the ground.

Guesthouse tells the story of the 6 month wait for a car. I had family members who were putting deposits down on harder to get cars, and then closer to the time of delivery, selling an option to people for the rights to purchase the car who didn't want to wait. It was that ridiculous.

Post crash, people were picking up 300sqm apartments on sukhumvit for 1 to 2 million baht.

I was working at all seasons place when the crash happened. There was only one of the three towers built, but I have to hand it to the developers, through all of it they kept construction going on the main tower. Most of the time it appeared that it was done with about 5 men, but they kept it ticking over.

[Old Man River]

In the case of the late 1990s banks, they did FAIL. The prior Thai bank companies and their brands disappeared, and were merged into or taken over by other banks with the considerable financial backing of the Thai government. The depositors may have gotten their money back eventually, but I don't know that the "investors" in those bank companies did.

As for fair use, I was quoting from an IMF public document report, not a private company's news article. Fair use doesn't apply to public documents.

Several finance companies failed, but for Thai banks the government came up with tier 1 and tier 2 capital injections. Most banks that needed capital opted for tier 2 as tier 1 meant they had to change top management. One large Thai bank took the tier 1 route.

I can't think of any bank depositor that lost their deposits, other than the several year's wait to get the money. Fincos weren't under the BOT, so they weren't in the tier 1and 2 capital injection program.