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Tipping point: Banks recalling loans pose long-term threat to Phuket’s tourism recovery

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Tipping point: Banks recalling loans pose long-term threat to Phuket’s tourism recovery

By Tanyaluk Sakoot

 

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Chains lock the doors to a restaurant in Kata. Photo: Tanyaluk Sakoot

 

Bhuritt Maswongssa, who serves as the Southern Thailand representative on the Tourism Council of Thailand (TCT), has called for government intervention on banks now calling in business loan repayments, warning that lack of action will send many hotels and other tourism-related businesses into bankruptcy and cause damage that will take the tourism industry years to recover from.

 

“Today, nearly all hotels on the island have bank loans. There are only a few hotels that do not have loans with the banks. This leaves many businesses on the island exposed to critical risk from not being able to make loan repayments during the current economic situation,” said Mr Bhurritt, who also owns and operates the Patong Resort Hotel as the General Manager.

 

“Some hotels may still be able to re-negotiate their loans or restructure them if they still have assets that they can use as collateral, but many hotels have been closed for a long time without any form of revenue, so it makes no sense for banks to be foreclosing on unpaid loans and seizing a property that will not make any money,” he added.

 

Full story: https://www.thephuketnews.com/tipping-point-banks-recalling-loans-pose-long-term-threat-to-phuket-tourism-recovery-76915.php

 

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-- © Copyright Phuket News 2020-08-08
 
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3 minutes ago, digger70 said:

I like to see that the banks do that .

If they do Recall All loans The banks will be in trouble themselves, There's no hope in Hell that the Borrowers can pay if they don't have the Money/Jobs/ Tourists business to meet the payments.

What are the banks going to do if they Foreclose? They will have Thousands off Properties on the books that they can't sell. The banks will also Go Broke.

 

Got to agree...Foreclosure is for the most part is the 'last' resort with a low return for the banks at the best of times can you imagine how many properties will be vacant and on the market should they drop the hammer now surely it would be more prudent to go the extra mile to assist the debtor knowing they will try their utmost to restructure and make a go of it rather than lose it all.  

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7 minutes ago, Sharp said:

Got to agree...Foreclosure is for the most part is the 'last' resort with a low return for the banks at the best of times can you imagine how many properties will be vacant and on the market should they drop the hammer now surely it would be more prudent to go the extra mile to assist the debtor knowing they will try their utmost to restructure and make a go of it rather than lose it all.  

But it will be a big burden on the Banks even than.

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7 minutes ago, Sharp said:

Got to agree...Foreclosure is for the most part is the 'last' resort with a low return for the banks at the best of times can you imagine how many properties will be vacant and on the market should they drop the hammer now surely it would be more prudent to go the extra mile to assist the debtor knowing they will try their utmost to restructure and make a go of it rather than lose it all.  

Whilst I agree with your Post in the main, the Banks cannot restructure all of their outstanding Loans.

They are simply unable to do this due to Capitalization, and to do so would allow for a much higher delinquency rate, with even bigger losses further down the line.

The onus really is upon the borrower to repay their Debts, money they eagerly took from the Bank because nothing could go wrong with their Business Etc. 

If a Business defaults upon a Loan, there is very little chance that they will be able to repay that Loan going forward

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4 minutes ago, digger70 said:

But it will be a big burden on the Banks even than.

Cant disagree with you ! Some serious risk assessments being throught thro now i would imagine ....

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Posted (edited)
2 minutes ago, Cake Monster said:

Whilst I agree with your Post in the main, the Banks cannot restructure all of their outstanding Loans.

They are simply unable to do this due to Capitalization, and to do so would allow for a much higher delinquency rate, with even bigger losses further down the line.

The onus really is upon the borrower to repay their Debts, money they eagerly took from the Bank because nothing could go wrong with their Business Etc. 

If a Business defaults upon a Loan, there is very little chance that they will be able to repay that Loan going forward

Agreed ! Consolidation Loan, Another loan or a bigger loan, longer term loan  ALL look a bad bet i suppose given the enviroment..Dammed if you do Dammed if you dont!! 

Edited by Sharp
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it makes no sense for banks to be foreclosing on unpaid loans and seizing a property that will not make any money,” he added.

 

Perfectly logical for a Thai bank though he most have forgot what country he was living in🤔

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2 hours ago, Cake Monster said:

They will probably have been running on  massive overdrafts even in the good times, with no contingency plans for any downturn in  trade. Now that there is no Collateral left to borrow against, they are in the doo-doo.

The  Banks will already have given these Business,s opportunity to restructure their Loans and Debt " holidays ", and now time has run out on their Loans.

The most prudent thing to do, would to let these Business,s slide out of the Market place, leaving fewer, but stronger, well Managed Business,s to take the Market Place, which will be stronger and better placed to deal with the future.

Makes a lot of sense, many smaller less financially stable businesses have been sailing close to the wind for a along time, these need to be weeded out leaving the financially sound businesses remaining for the fewer customers that are using them now.
Too many are borrowing money to remain but have no way of repayment and no future prospect.

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