ICYMI: Thai banks face biggest default since '97 crash

[JingerBen]

The Asian '97 crash started in Thailand with the collapse of a single bank (BCCI) which brought down all the other Thai finance companies. I think over 100 went under then. if I remember correctly.

This could be a repeat given the state of oversupply in the property market,just as in '97, and the dollar debt that backed it up. At least this time the Thai baht is floating so the collapse may be spread over months rather than days. But I think the Thaitanic is doomed yet again.

Not really, BCCI was something else entirely.

It was the Bank of Crooks and Conmen International if I remember correctly.

[willyumiii]

Quick give the banks more money, they need to be bailed out so they can continue to rape and plunder society more.

What do you think this is, The USA?

[Time Traveller]

Feel sorry for the UK workers who will lose their jobs due to this situation.

Actually they never should have been hired in the first place. The venture only started because of irresponsible lending to the steel company who could not possibly pay back the loans.

[Thai at Heart]

Feel sorry for the UK workers who will lose their jobs due to this situation.

Actually they never should have been hired in the first place. The venture only started because of irresponsible lending to the steel company who could not possibly pay back the loans.

All true, but the consequences for that area are massive and go beyond the main employees. All the contractors and businesses associated with the plant will suffer. Not good times at all.

[sendintheclowns]

The Asian '97 crash started in Thailand with the collapse of a single bank (BCCI) which brought down all the other Thai finance companies. I think over 100 went under then. if I remember correctly.

Not really, BCCI was something else entirely.

It was the Bank of Crooks and Conmen International if I remember correctly.

555

Remember if the Thaitanic goes down, your foreign pension will be worth a lot more. Eat drink and be merry for tomorrow we sink!

[TheCruncher]

It's clear evidence of zip. And I'll wager my Asian bank stays afloat a lot longer after your American bank has sunk.

Any reason why you say Asian bank instead of Thai bank?

[Orac]

I wouldn't get too excited at this stage, the loans are not yet classified as NPL, despite Bloombergs pretty chart, plus BOT made all three banks make provisions for this loan some time ago - the fact that the debt will be structured is also positive rather than simply written off.

You may well be correct about this case. The real test will come over the next year and beyond when the full extent of the non performing loans becomes apparent.

SCB have already set aside an extra 10.5bn baht making the SSI UK loans fully provisioned assuming zero collateral value. If they don't write it off their non-performing loans will be at 3.8% - 3.1% if fully written off. They have also just sold just sold 7.5bn bahts worth of assets to bolster earnings which was sale of shares of Siam Cement to the Crown Property Bureau who are also the largest shareholder of SCB.

[TheCruncher]

I wouldn't get too excited at this stage, the loans are not yet classified as NPL, despite Bloombergs pretty chart, plus BOT made all three banks make provisions for this loan some time ago - the fact that the debt will be structured is also positive rather than simply written off.

You may well be correct about this case. The real test will come over the next year and beyond when the full extent of the non performing loans becomes apparent.

SCB have already set aside an extra 10.5bn baht making the SSI UK loans fully provisioned assuming zero collateral value. If they don't write it off their non-performing loans will be at 3.8% - 3.1% if fully written off. They have also just sold just sold 7.5bn bahts worth of assets to bolster earnings which was sale of shares of Siam Cement to the Crown Property Bureau who are also the largest shareholder of SCB.

And they were also just the other day downgraded by Moody's, so it seems that well informed people don't share your optimism.

[Orac]

I wouldn't get too excited at this stage, the loans are not yet classified as NPL, despite Bloombergs pretty chart, plus BOT made all three banks make provisions for this loan some time ago - the fact that the debt will be structured is also positive rather than simply written off.

You may well be correct about this case. The real test will come over the next year and beyond when the full extent of the non performing loans becomes apparent.

SCB have already set aside an extra 10.5bn baht making the SSI UK loans fully provisioned assuming zero collateral value. If they don't write it off their non-performing loans will be at 3.8% - 3.1% if fully written off. They have also just sold just sold 7.5bn bahts worth of assets to bolster earnings which was sale of shares of Siam Cement to the Crown Property Bureau who are also the largest shareholder of SCB.

And they were also just the other day downgraded by Moody's, so it seems that well informed people don't share your optimism.

Moody's have said the SSI situation is credit negative for them which, given the amounts, is fairly obvious.

[andytime]

It's clear evidence of zip. And I'll wager my Asian bank stays afloat a lot longer after your American bank has sunk.

I am not American but I can assure you that all banks will be feeling more than a wee bit overextended at present - Thai, Aussie, American, European, Brazilian, South African, Japanese, Russian and likely most of all Chinese ones. Losing $1.4 billion USD is never great I'm sure regardless of how you split it up and think it is easy to stomach. SCB were downgraded by one of the credit agencies this week.. As for their car loans and condo loans - a discussion for another time. I'm sure they're performing great.

That is likely all insignificant when you look at China which has made America look like a school kid in the credit creation stakes. Throw in the mainland gambling culture of red/black and doubleup and I will assure you worry about this backyard first and foremost.

The one thing that one can be sure of is America despite it being as monty python in the dead parrot skit puts it "shagged after a long squawk" will not be the first one under the bus. Of that I can assure you.

Look around the world and watch the wipeout in currencies - Brazil, Russia, South Africa, Australia, Euro, Malaysia, Singapore and a 20% loss on the thai baht in just over a year. The many trillions borrowed in USD just cost a lot (LOT) more to pay back.

Arguing about my Thai bank is better than your American one is for kids.

China will provide all of us with a doozy of a headache - the order of collapse is important and America and their banks will NOT be the first to fold nor will they be going under the bus first.

China is now limiting all overseas ATM withdrawls for the balance of this year to 50,000 RMB and next year total of 100k through UNIION PAY.

The doors are closing fast.

[allan michaud]

They certainly took a big risk in such uncertain times now they can line up at the barber shop and take a haircut.

Incredible the world is in such terrible shape and the stock markets keeps chugging along with only a couple minor hiccups.

That's because the financial markets are not based on any kind of reality. If they ever linked to the real world they will implode.

[NeverSure]

Quick give the banks more money, they need to be bailed out so they can continue to rape and plunder society more.

What do you think this is, The USA?

It may need to "be the USA" if things get bad enough. Look at what TARP did...

Most people know about TARP - the Troubled Asset Relief Program that "bailed out" banks and the auto industry.

What many people don't know is that the US government has recovered almost all of those loans (with interest) and investments and the cost long term was "only" a few billion. The cost of NOT doing it would have been the loss of millions of jobs from the shutdowns and knock on effects. It would have meant the loss of the US auto industry as banks had all but stopped making auto loans due to lack of capital.

The TARP monies were either loans or stock purchases, not gifts, and the government has successfully exited all of it, some of it at a profit.

"On December 19, 2014, Treasury announced that it had sold its remaining 54.9 million shares of Ally Financial Inc. (Ally) common stock, exiting the last Troubled Asset Relief Program (TARP) equity investment under the Auto Industry Financing Program.

The automobile industry is now profitable and creating jobs at the fastest pace in 15 years. In fact, since June 2009, when GM and Chrysler emerged from bankruptcy, more than 500,000 jobs have been created."

MORE

[SiSePuede419]

And this is BEFORE the US Fed raises interest rates later this year, which will send Thailand's Real Estate Market in a tailspin...

555

[EnglishJohn]

Seems to be the worst business decision since "The rice scheme may even make a profit".

[nidieunimaitre]

Another thing many people overlook, forget or even ignore is envirement clean up at some of these sites due to pollution that was overlooked in past years but not anymore. Now you have the tree huggers who are getting more and more support /legal backing to force bring abondoned sites back to the orginal, beautiful unspoiled playground that it was years ago. mor4e massive expense quite possible with todays, ''lets stick it to them '' attitude which seems very popular, especially by those on the dole /welfare who contribute quite little in tax dollars required if there are not enough value in assets to cover debts, taxes,, clean up , wages due, pensions, etc

Say again please?

[Longtooth]

They certainly took a big risk in such uncertain times now they can line up at the barber shop and take a haircut.

Incredible the world is in such terrible shape and the stock markets keeps chugging along with only a couple minor hiccups.

Well, I don't think that you can call almost 20% wiped off the world's stock markets in the last three months a hiccough.

Some 13 Trillion USD's all gone.

222.jpg

I am sure a few people felt that.

You know, I can't help but always wonder, "Where does this money go?" Did it "exist" at some time? Did it just vaporize? Is some janitor busy like a ferret on crack burning it up in some secure cellar? I'm guessing it somehow passes to some people's pockets. One man's lose is another man's gain? World finance confounds me. (Obviously)

Actually, after thinking about it, I guess Tata Industries ended up with it. Lucky them.

[NOC]

The Asian '97 crash started in Thailand with the collapse of a single bank (BCCI) which brought down all the other Thai finance companies. I think over 100 went under then. if I remember correctly.

This could be a repeat given the state of oversupply in the property market,just as in '97, and the dollar debt that backed it up. At least this time the Thai baht is floating so the collapse may be spread over months rather than days. But I think the Thaitanic is doomed yet again.

Not really, BCCI was something else entirely.

I think BCCI was in the laundry business...

[chiang mai]

It's clear evidence of zip. And I'll wager my Asian bank stays afloat a lot longer after your American bank has sunk.

Yes, you are wagering.

Yes, but supported strongly by logic..

Note how many US banks are in the top 20, http://www.richestlifestyle.com/safest-banks-in-the-world/4/

I bank with number 14, who do you bank with?

(or number 13 if you use this measure)

http://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=216&

[Valentine]

The Asian '97 crash started in Thailand with the collapse of a single bank (BCCI) which brought down all the other Thai finance companies. I think over 100 went under then. if I remember correctly.

This could be a repeat given the state of oversupply in the property market,just as in '97, and the dollar debt that backed it up. At least this time the Thai baht is floating so the collapse may be spread over months rather than days. But I think the Thaitanic is doomed yet again.

Not really, BCCI was something else entirely.

It was the Bank of Crooks and Conmen International if I remember correctly.

The Bangkok Bank Of Commerce if I remember correctly which traded quite wildly on the sharemarket before the proverbial hit the fan. I wonder what happened to the Indian guy extradited back from Canada or is he in jail, already been sentenced. More likely out on bail living a good life while an endless round of appeals carries on.

[12DrinkMore]

They certainly took a big risk in such uncertain times now they can line up at the barber shop and take a haircut.

Incredible the world is in such terrible shape and the stock markets keeps chugging along with only a couple minor hiccups.

Well, I don't think that you can call almost 20% wiped off the world's stock markets in the last three months a hiccough.

Some 13 Trillion USD's all gone.

222.jpg

I am sure a few people felt that.

You know, I can't help but always wonder, "Where does this money go?" Did it "exist" at some time? Did it just vaporize? Is some janitor busy like a ferret on crack burning it up in some secure cellar? I'm guessing it somehow passes to some people's pockets. One man's lose is another man's gain? World finance confounds me. (Obviously)

Actually, after thinking about it, I guess Tata Industries ended up with it. Lucky them.

The "money" never really exists except in peoples' minds.

13 Trillion cash was not spent in bidding up the capitalisation and 13 Trillion cash was not lost when it all came down again.

It is only the valuation of an asset price.

Problems arise when the assets are used as collateral for loans, or market gamblers are borrowing and buying stocks with leverage. The asset value falls but the debt stays written in big numbers on the wall.

"When the tide goes out, we'll see who is wearing pants".

[bangon04]

Have you not noticed chang mai that the unit is now not producing steel along with the workforce being laid off?

I think you'll find out that the owners are under the impression that the U.K. government (read taxpayer) will pay the debs and then all will be well.

Not going to happen.

yes those pesky Farang have caused a major loss to Thailand banks. How dare they. Good Thais were just trying o make a profit by owning a business in the UK.

[12DrinkMore]

It's clear evidence of zip. And I'll wager my Asian bank stays afloat a lot longer after your American bank has sunk.

Yes, you are wagering.

Yes, but supported strongly by logic..

Note how many US banks are in the top 20, http://www.richestlifestyle.com/safest-banks-in-the-world/4/

I bank with number 14, who do you bank with?

(or number 13 if you use this measure)

http://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=216&

And which country is the absolute winner in failed banks since the start of the century?

Yeah! It is Obamahland.

541 banks failed, gone, busted, insolvent, taken over. Lots of debts gone bad.

https://www.fdic.gov/bank/individual/failed/banklist.html

[hugh2121]

They certainly took a big risk in such uncertain times now they can line up at the barber shop and take a haircut.

Incredible the world is in such terrible shape and the stock markets keeps chugging along with only a couple minor hiccups.

Well, I don't think that you can call almost 20% wiped off the world's stock markets in the last three months a hiccough.

Some 13 Trillion USD's all gone.

222.jpg

I am sure a few people felt that.

Looks more like 13 billion to me. (13 bi million)

[TheCruncher]

They certainly took a big risk in such uncertain times now they can line up at the barber shop and take a haircut.

Incredible the world is in such terrible shape and the stock markets keeps chugging along with only a couple minor hiccups.

Well, I don't think that you can call almost 20% wiped off the world's stock markets in the last three months a hiccough.

Some 13 Trillion USD's all gone.

222.jpg

I am sure a few people felt that.

Looks more like 13 billion to me. (13 bi million)

You should look a again, VW alone lost 18 Billion in a single day, earlier this week.

[hugh2121]

18 billion or 18 thousand million?

[TheCruncher]

18 billion or 18 thousand million?

A billion is a number with two distinct definitions:

• 1,000,000,000, i.e. one thousand million, or 10⁹ (ten to the ninth power), as defined on the short scale. This is now generally the meaning in both British and American English.^[1][2]
• 1,000,000,000,000, i.e. one million million, or 10¹² (ten to the twelfth power), as defined on the long scale. This is one thousand times larger than the short scale billion, and equivalent to the short scale trillion.

[hugh2121]

18 billion or 18 thousand million?

A billion is a number with two distinct definitions:

• 1,000,000,000, i.e. one thousand million, or 10⁹ (ten to the ninth power), as defined on the short scale. This is now generally the meaning in both British and American English.^[1][2]
• 1,000,000,000,000, i.e. one million million, or 10¹² (ten to the twelfth power), as defined on the long scale. This is one thousand times larger than the short scale billion, and equivalent to the short scale trillion.

Not so, the clue is in the name.

Billion is a shortening of bi-million i.e. 10 to power 12 (bi meaning 2) or 2 times 6 zeroes.

Trillion is a shortening of tri-million i.e. 10 to power 18 (tri meaning 3) or 3 times 6 zeroes.

Any other figures defy logic.

Simples!

[billd766]

So yet again are about to see Thailand leading the rest of the region into financial turmoil ?

The whole deal from the start was no more than a massive ego trip and the thought that the company involved would control the steel industry.

A pity no questions were asked as to why India's most successful trading group TATA industries were unloading the plant as quickly as they could.

It was originally owned by British Steel but was sold off to TATA at a loss.

TATA couldn't make a profit either so they sold it to SSI, who in turn found that they couldn't make a profit either.

They have been looking for some other mug to offload it to, but what with the worldwide slump in steel prices, China and the rest of the world contracting there are not many mugs left to buy it.

I don't think this will be like 1997 all over again though there are 2 Thai banks involved.

Due diligence may not have been as strict as it could have been and perhaps TATA were selling at a "gift horse" price may have blinded SSI to the bad bits.

[billd766]

Have you not noticed chang mai that the unit is now not producing steel along with the workforce being laid off?

I think you'll find out that the owners are under the impression that the U.K. government (read taxpayer) will pay the debs and then all will be well.

Not going to happen.

A certain number of staff will be kept on as AFAIK they cannot simply shut down the blast furnaces without causing major problems in the future.

[SheungWan]

So yet again are about to see Thailand leading the rest of the region into financial turmoil ?

The whole deal from the start was no more than a massive ego trip and the thought that the company involved would control the steel industry.

A pity no questions were asked as to why India's most successful trading group TATA industries were unloading the plant as quickly as they could.

It was originally owned by British Steel but was sold off to TATA at a loss.

TATA couldn't make a profit either so they sold it to SSI, who in turn found that they couldn't make a profit either.

They have been looking for some other mug to offload it to, but what with the worldwide slump in steel prices, China and the rest of the world contracting there are not many mugs left to buy it.

I don't think this will be like 1997 all over again though there are 2 Thai banks involved.

Due diligence may not have been as strict as it could have been and perhaps TATA were selling at a "gift horse" price may have blinded SSI to the bad bits.

It does look like a remarkably bad investment from the off and the banks involved dozy beyond belief. Why they particularly wanted to invest in the British steel industry is a puzzle to me as opposed to the car industry where foreign companies have bought into brand names which are not so easily copied. has British steel some special quality?