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Bangkok Bank cuts lending rates to assist SMEs


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Bangkok Bank cuts lending rates to assist SMEs
By The Nation

 

Bangkok Bank on Monday announced cuts of 25 and 50 basis points respectively in its minimum overdraft rate (MOR) and minimum retail rate (MRR) to 7.125 per cent for both types of loan interest rate, in order to help lower the financial costs of SMEs, increase their competitiveness, and support the economy.

 

The new rates take effect on Tuesday.

 

Senior executive vice president Suvarn Thansathit said the bank’s MOR and MRR rate reductions were aimed to help business operators, especially small and medium-sized enterprises, to lower their interest-rate costs, which contribute to business operation costs.

 

“Bangkok Bank is committed to assisting operators to improve their business efficiency and competitiveness, which will help drive the economy in line with government policies,” he said.

 

Source: http://www.nationmultimedia.com/news/business/EconomyAndTourism/30315269

 
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-- © Copyright The Nation 2017-05-15
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1 minute ago, worgeordie said:

It does not say,but I suspect the rates will also be lowered for depositors,

if it does means that interest rates are well below inflation,

regards orgeordie

I'm betting they wont lower their savings interest rates, that would make them uncompetitive in the Thai marketplace, after all, the MMPC left rates on hold this month hence there's no reason to lower them.

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7 minutes ago, simoh1490 said:

I'm betting they wont lower their savings interest rates, that would make them uncompetitive in the Thai marketplace, after all, the MMPC left rates on hold this month hence there's no reason to lower them.

I suspect the rest of the banks will follow,never ever heard of any bank lowering the rates

without lowering the other, but there is quite a wide spread for them to be able to do that.

we will see.

regards worgeordie

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1 minute ago, worgeordie said:

I suspect the rest of the banks will follow,never ever heard of any bank lowering the rates

without lowering the other, but there is quite a wide spread for them to be able to do that.

we will see.

regards worgeordie

Again, I doubt it very much, it's the Central Bank that sets the running, not individual bank initiatives. But as you say, we'll see.

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Just now, elgordo38 said:

Lending at 7.125% and paying me 1.5% for 12 months. Interesting. Thats what I call a real spread

Most borrowers in most countries would chew their your left leg off to be able to borrow money at 7.125% per year.

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1 minute ago, simoh1490 said:

Most borrowers in most countries would chew their your left leg off to be able to borrow money at 7.125% per year.

Really I must be missing something. Big corporations are borrowing money for next to nothing to finance buy backs and buy the competition 

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Just now, elgordo38 said:

Really I must be missing something. Big corporations are borrowing money for next to nothing to finance buy backs and buy the competition 

7.125% is the MLR for consumer loans, not business loans which is a totally different kettle of fish..

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19 hours ago, worgeordie said:

I suspect the rest of the banks will follow,never ever heard of any bank lowering the rates

without lowering the other, but there is quite a wide spread for them to be able to do that.

we will see.

regards worgeordie

Four other major banks announced the lowering of loan rates...KrungThai, SCB, and Kaiskorn according to the Bangkok Post this morning.  Seems the Nation article in this thread only talked Bangkok Bank....guess the Nation didn't get the memo about the other 3 banks.

 

I seriously doubt the banks will lower savings rates also....savings rates are low already.  Plus like you said even with a cut in loan rates there is still a BIG spread between loan and savings rates.

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17 minutes ago, Srikcir said:

... for the government borrowing, not for private banks.

Nonsense! BOT, or actually the MMPC, sets the rate monthly at which it will lend to the most credit worthy banks, the rate is also used to determine the interest paid to bank for overnight money. The banks in turn use that rate as their guide to interest rates they will pay their customers to lend to them, aka, the rate they will pay on saving deposits.

 

Government borrowings is something entirely different, the rate they pay is determined more by the country's credit rating and the type of borrowings involved which can range from issuing short to long term bonds, debentures and fixed or variable term lending.

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25 minutes ago, simoh1490 said:

The banks in turn use that rate as their guide to interest rates they will pay their customers to lend to them, aka, the rate they will pay on saving deposits.

Yes - as a GUIDE not as a template.

 

Ultimately, private banks loan interest rates are market-driven. Their rates won't be lower than offered by BOT as that means zero profit margins. However, during the Prayut government term, private banks have offered lower than market rates (typically BOT + points) for at-risk borrowers with loan guarantees (ie., payment of defaulted loan interest) and interest subsidies (aka "soft loans") by the government in efforts to lower household debt and encourage farmer investment. The cost of such government intervention eventually is paid by government debt.

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6 minutes ago, Srikcir said:

Yes - as a GUIDE not as a template.

 

Ultimately, private banks loan interest rates are market-driven. Their rates won't be lower than offered by BOT as that means zero profit margins. However, during the Prayut government term, private banks have offered lower than market rates (typically BOT + points) for at-risk borrowers with loan guarantees (ie., payment of defaulted loan interest) and interest subsidies (aka "soft loans") by the government in efforts to lower household debt and encourage farmer investment. The cost of such government intervention eventually is paid by government debt.

You appear to be confusing lending and borrowing rates. An example:

 

A private bank called X parks their excess funds overnight with the Central Bank every night at a rate that is set by the MMPC each month, that is the interest rate the Central Bank, BOT, pays the banks for use of their overnight funds.

 

Bank X also borrows money from customers on a fixed or variable term basis and at a fixed or variable rate of interest which in the first instance, based on the term, is almost never higher than the monthly BOT MMPC rate - this is consumer savings and fixed deposits offered by bank X.

 

Bank X also lends money to their most credit worthy customers at a rate that is almost never below the MLR of bank X but may actually be at the MLR. The poorer the credit worthiness of the customer, the higher the additional number of percentage point sis added to the MLR, MLR +3% for example. This is consumer lending offered by bank X.

 

Commercial lending by Bank X is very similar to the above except the scales, rates and collateral terms will be different - it is this lending where Bank X has reduced it's loan interest rates but only to SME's.

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