Thai banks strong, can weather economic uncertainty - central bank

[Brierley]

3 minutes ago, Logosone said:

 

Okay, thank you very much for clarifying this, I of course accept your explanation. It takes a lot of courage to accept your own error. This is not just a technical quibble though, because your underlying point was that this Thai bank has a lot of assets, the point of this thread is to say that Thai banks are strong. However, if you look at real world figures, the fifth largest UK bank has TEN times the assets of the fifth largest Thai bank.

 

Just because the parent company of the majority Japanese shareholder of Bank of Ayudhya has 3.1 trillion USD in assets, I do not see how this in any way proves that Thai banks are strong. If you compare by assets, rather the opposite looks to be the case, the fifth largest UK bank has ten times the assets of the fifth largest Thai bank.

 

By the way, the fact that MUFG's parent has 3.1 trillion USD of assets is in no way a comfort to anyone in Krungsri if that bank were to go bankrupt, because as you probably know an investors' liability is limited to the amount of its shareholding. The Japanese investment in Krungsri is considerably less than 87 billion, and in the event of any bankruptcy any creditor claim of any Krungsri creditor on the majority shareholder's assets would be unlikely to get any portion remotely close to 3.1 trillion USD. It would just be impossible.

 

 

I do not agree that the asset size of the holding company is not financially beneficial to the bank itself, it has to be, otherwise there was little point in the relationship. The holding company acquired a majority stake from GE in the knowledge that the bank would be a good financial asset. It also knew, because the holding company is in the banking business, that the bank may require liquidity of some type, at some point. Buying the majority holding is not a one way street and all parties understand that. It is unquestionable that Bank of Ayudhya is financially advantaged as a result of the asset size of the group, the bigger the better.

 

 

[Mavideol]

29 minutes ago, Brierley said:

I didn't say loan demand, the subject is the financial position of banks.,

 you said 97% of Thais paid their loans and I answer to that, the above comment about any bank's financial position is irrelevant to my answer,  it's just blablabla

[Logosone]

2 minutes ago, Brierley said:

I do not agree that the asset size of the holding company is not financially beneficial to the bank itself, it has to be, otherwise there was little point in the relationship. The holding company acquired a majority stake from GE in the knowledge that the bank would be a good financial asset. It also knew, because the holding company is in the banking business, that the bank may require liquidity of some type, at some point. Buying the majority holding is not a one way street and all parties understand that. It is unquestionable that Bank of Ayudhya is financially advantaged as a result of the asset size of the group, the bigger the better.

 

 

 

Well, the 3.1 trillion USD of assets of Mitsubishi UFJ, will be of exactly zero benefit to any creditor of Krungsri if it goes bankrupt. Because obviously MUFG is not invested to the tune of 3.1 trillion USD in the fifth largest bank in Thailand, and common sense will tell you that its exposure in Thailand's banks is limited to its investment in Thailand's banks, which is massively below 3.1 trillion USD, and also way below 87 billion USD.

 

Your argument is effectively the same as if someone said because BASF bought a small Portuguese chemical company therefore the Portuguese chemical sector is strong and solid. That may be so but it in no way follows from a BASF purchase.

 

Parent companies have been known to cut off companies they bought without so much as a blink of an eye. Indeed the US government let Lehman brothers fail which at one point had over 600 billion USD of assets.

 

Now, does the wealth of Mitsubishi UFJ have advantages, of course in terms of access to credit and such, but it does not in and of itself show or prove that Thai banks are strong. Again, Krungsri, the fifth largest bank in Thailand has 10 times LESS assets than the fifth largest UK bank. I would say that shows that the Thai banking sector is 10 times weaker than the UK banking sector for instance, probably a lot more.

 

 

 

 

 

 

[cclub75]

53 minutes ago, CALSinCM said:

The banks would be bailed out by the IMF and the Thai public would be on the hook for the debt. After which bank execs get massive bonuses and the public get massive austerity.

 

No. This is "20th century" way of thinking.

 

1997 redux would be impossible today.

 

China would come as a white knight... Or CP or whatever.

 

The IMF is irrelevant now, in such situation.

 

Even for poor african countries, the IMF became irrelevant (China is bankrolling african countries).

 

SEA is the backyard of China. Period.

 

 

[Brierley]

48 minutes ago, Logosone said:

 

Well, the 3.1 trillion USD of assets of Mitsubishi UFJ, will be of exactly zero benefit to any creditor of Krungsri if it goes bankrupt. Because obviously MUFG is not invested to the tune of 3.1 trillion USD in the fifth largest bank in Thailand, and common sense will tell you that its exposure in Thailand's banks is limited to its investment in Thailand's banks, which is massively below 3.1 trillion USD, and also way below 87 billion USD.

 

Your argument is effectively the same as if someone said because BASF bought a small Portuguese chemical company therefore the Portuguese chemical sector is strong and solid. That may be so but it in no way follows from a BASF purchase.

 

Parent companies have been known to cut off companies they bought without so much as a blink of an eye. Indeed the US government let Lehman brothers fail which at one point had over 600 billion USD of assets.

 

Now, does the wealth of Mitsubishi UFJ have advantages, of course in terms of access to credit and such, but it does not in and of itself show or prove that Thai banks are strong. Again, Krungsri, the fifth largest bank in Thailand has 10 times LESS assets than the fifth largest UK bank. I would say that shows that the Thai banking sector is 10 times weaker than the UK banking sector for instance, probably a lot more.

 

 

 

 

 

 

I'm glad you agree that the relationship is financially beneficial to the Thai bank, which was really all I said.

 

And the fact that some banks in some other countries are bigger by some amount, is neither here nor there in this debate. That said, since we're already way off topic let me take it even further and say that the UK economy is many times larger than Thai GDP, it therefore follows that their banks would be also.

 

 

[Brierley]

57 minutes ago, Mavideol said:

 you said 97% of Thais paid their loans and I answer to that, the above comment about any bank's financial position is irrelevant to my answer,  it's just blablabla

I don't estimate or guestimate the NPL rate, the BOT measures it fairly precisely. I believe the BOT statement that NPL's are circa 3%, you believe your girlfriend that the number is higher and at the branch where she works. That may indeed be the case. I just don't see how your girlfriend can see the NPL position across all the branches of all the banks but I do see how the Governor of the BOT can.

[Logosone]

3 hours ago, Brierley said:

I'm glad you agree that the relationship is financially beneficial to the Thai bank, which was really all I said.

 

And the fact that some banks in some other countries are bigger by some amount, is neither here nor there in this debate. That said, since we're already way off topic let me take it even further and say that the UK economy is many times larger than Thai GDP, it therefore follows that their banks would be also.

 

 

 

Yes, it can be an advantage to be owned by a large banking group, it can make access to the capital markets easier, better credit rating, but it need not be an advantage, and it can be a disadvantage. If Mitsubishi UFJ were to get into trouble, and of course larger banks are more exposed than others and we have seen very large banks with many times the assets of Krungsri go bankrupt, then the dependence on Mitsubishi UFJ becomes a disadvantage. In and of itself having a large parent does not mean a bank is strong, large companies have bought great duds in the past and then got rid of them. Certainly the asset size of Krungsri does not wow anyone, when  you consider it is 10 times smaller than the fifth largest UK bank.

 

We're not off topic at all, we're right on topic, which is whether thai banks are strong or not. I don't think the asset size of Krungsri shows it is strong, it's fairly small by international comparison. 

[Brierley]

6 hours ago, Logosone said:

 

Yes, it can be an advantage to be owned by a large banking group, it can make access to the capital markets easier, better credit rating, but it need not be an advantage, and it can be a disadvantage. If Mitsubishi UFJ were to get into trouble, and of course larger banks are more exposed than others and we have seen very large banks with many times the assets of Krungsri go bankrupt, then the dependence on Mitsubishi UFJ becomes a disadvantage. In and of itself having a large parent does not mean a bank is strong, large companies have bought great duds in the past and then got rid of them. Certainly the asset size of Krungsri does not wow anyone, when  you consider it is 10 times smaller than the fifth largest UK bank.

 

We're not off topic at all, we're right on topic, which is whether thai banks are strong or not. I don't think the asset size of Krungsri shows it is strong, it's fairly small by international comparison. 

Respectfully, the topic is whether Thai banks are strong or not. The topic is not whether Thai banks are stronger than banks in other countries, countries where the economy is also very different. Thai banks support customers within the Thai economy, the OP says, and I agree, they are more than capable of being able to do that. It is irrelevant to the debate that Banks XY and Z in countries AB and C are ten or twenty times bigger, it's their job to be bigger because their economies and their footprints are also bigger.

[Brierley]

There's an informative piece this morning in the business section of the paper that cannot be named, it talks about NPL's and bank lending defaults.

 

The articles says that commercial NPL's have declined from 3.23% to 3.17% as a result of debt restructuring and targeted debt moratoriums. The ratio of consumer NPL's has risen from 2.85% to 2.92%, mostly as a result of tourism related problems and this currently is the major area of concern.

 

Meanwhile, late payments or special mention loans have declined from 7.03% to 6.41%.

 

Commercial banking loan loss reserves stand at THB 44 bill for 1Q21, 14% lower than the previous year when over THB 240 bill was set aside for loss reserves.. 

[itsari]

13 hours ago, Mavideol said:

my friend's GF works at BkBk and she said the opposite, her words """ more than 80% of people that borrow money from us can't pay, they keep coming back asking for more..."""  small Mom & Pop business it's almost 100% defections on loans, some ask for more money to pay the previous loan.....  but one can look at it on a positive way

Your girl friends friend talks facts and not fiction . Facts that make sense 

[itsari]

2 hours ago, Brierley said:

Respectfully, the topic is whether Thai banks are strong or not. The topic is not whether Thai banks are stronger than banks in other countries, countries where the economy is also very different. Thai banks support customers within the Thai economy, the OP says, and I agree, they are more than capable of being able to do that. It is irrelevant to the debate that Banks XY and Z in countries AB and C are ten or twenty times bigger, it's their job to be bigger because their economies and their footprints are also bigger.

Respectfully , it is you that raised the subject of foreign companies when you mentioned Mitsubishi .

[Brierley]

19 minutes ago, itsari said:

Respectfully , it is you that raised the subject of foreign companies when you mentioned Mitsubishi .

Yes, but only as a casual passing statement, not the subject of a doctorial thesis!

[jacko45k]

17 hours ago, Brierley said:

100,000 assumes all of them keep 800k in the bank for visa purposes, that's very unlikely, many will be married and hold half that amount.

I would like to know how many retirement extensions there are before working out this impact..... Obviously not all of them should have 800k (for 5 months of the year), some definitely use the 60,000 baht monthly income, some have embassy letters, and the reality is many will have arranged via an agent and have substantially less too.

[Brierley]

1 minute ago, jacko45k said:

I would like to know how many retirement extensions there are before working out this impact..... Obviously not all of them should have 800k (for 5 months of the year), some definitely use the 60,000 baht monthly income, some have embassy letters, and the reality is many will have arranged via an agent and have substantially less too.

I posted a link early which said that in 2019, Thai Immigration processed 80,000 long stay visa's for the over 50's, my calculation assumed, as an extreme, that they were all on the 800k method, which clearly is false.

[ExpatOilWorker]

On 5/18/2021 at 7:29 AM, Brierley said:

As said, non-performing loans remain about 3% plus the loan book grew by over 3%. That means 97% of people are repaying their loans and the volume of new business ha grown by 3%.

You also have about 7% of SM loans and that is in a time where many got a helping hand from the debt memorandum. 

If you dig a bit deeper, NPL among SME is nearly 10% and SM about 16%.

The little guy and his business is hurting.

Below are numbers from Q4 2020. Q2 this year is most likely not much better.

 

[Brierley]

4 minutes ago, ExpatOilWorker said:

You also have about 7% of SM loans and that is in a time where many got a helping hand from the debt memorandum. 

If you dig a bit deeper, NPL among SME is nearly 10% and SM about 16%.

The little guy and his business is hurting.

Below are numbers from Q4 2020. Q2 this year is most likely not much better.

 

Yes, I posted the figures, including Special Mention loans, in a separate thread this morning after I read the morning paper. There's a useful article on the subject in the paper whose name cannot be mentioned, in the business section. SM loans seem to be around 6.7% as I recall.

 

 

Edited May 19, 2021 by Brierley

[ExpatOilWorker]

5 hours ago, Brierley said:

Yes, I posted the figures, including Special Mention loans, in a separate thread this morning after I read the morning paper. There's a useful article on the subject in the paper whose name cannot be mentioned, in the business section. SM loans seem to be around 6.7% as I recall.

 

 

An article with the title "BoT worried over possible  rise in NPLs", right?

 

We are already on the 3rd debt memorandum.  Once the appetite for keeping these zombie companies afloat end, we will start to see the true state of the Thai economy. 

Some will come out stronger, but many SMEs will fade away.

[Brierley]

22 minutes ago, ExpatOilWorker said:

An article with the title "BoT worried over possible  rise in NPLs", right?

 

We are already on the 3rd debt memorandum.  Once the appetite for keeping these zombie companies afloat end, we will start to see the true state of the Thai economy. 

Some will come out stronger, but many SMEs will fade away.

Maybe, maybe not, I wouldn't want to try and predict the future. Logically what you say is correct but what the impact will be and how many SME's will fail, at this stage is pure guesswork. 

[Logosone]

11 hours ago, Brierley said:

Respectfully, the topic is whether Thai banks are strong or not. The topic is not whether Thai banks are stronger than banks in other countries, countries where the economy is also very different. Thai banks support customers within the Thai economy, the OP says, and I agree, they are more than capable of being able to do that. It is irrelevant to the debate that Banks XY and Z in countries AB and C are ten or twenty times bigger, it's their job to be bigger because their economies and their footprints are also bigger.

 

As you know there are global rules banks have to adhere to regarding capital adequacy ratios and other parametres, as provided in Basle III. It was you who adduced banks in other countries and indeed asset size as a measure of strength. I would put it to you that asset size in and of itself is in no way an indicator of whether a bank is strong or not. After all Lehman Brothers had 600 billion in assets and still failed.

 

I would rather say that things like capital adequacy ratios of Thai banks, and then by comparison to other banks in other countries, why not, would show whether Thai banks are strong or not, don't you think?

 

But then that would have to rely on the numbers provided by Thai banks, and we have seen with the Wirecard scandal in Germany that even German financial regulators are completely clueless as to whether financial numbers are faked, as indeed were top accountancy firm Ernst & Young. So I don't think you can be sure in any way that Thai banks are strong, only adduce certain arguments that would indicate their strength. Asset size of the parent is clearly not one of them.

Edited May 19, 2021 by Logosone

[Brierley]

2 minutes ago, Logosone said:

 

As you know there are global rules banks have to adhere to regarding capital adequacy rations and other parametres. It was you who adduced banks in other countries and indeed asset size as a measure of strength. I would put it to you that asset size in and of itself is in no way an indicator of whether a bank is strong or not. After all Lehman Brothers had 600 billion in assets and still failed.

 

I would rather say that things like capital adequacy ratios of Thai banks, and then by comparison to other banks in other countries, why not, would show whether Thai banks are strong or not, don't you think?

 

But then that would have to rely on the numbers provided by Thai banks, and we have seen with the Wirecard scandal in Germany that even German financial regulators are completely clueless as to whether financial numbers are faked, as indeed were top accountancy firm Ernst & Young. So I don't think you can be sure in any way that Thai banks are strong, only adduce certain arguments that would indicate their strength. Asset size of the parent is clearly not one of them.

As replied to poster itsari earlier, I did indeed mention overseas banks first::

 

8 hours ago, Brierley said:

Yes, but only as a casual passing statement, not the subject of a doctorial thesis!

 

[itsari]

2 hours ago, Brierley said:

Maybe, maybe not, I wouldn't want to try and predict the future. Logically what you say is correct but what the impact will be and how many SME's will fail, at this stage is pure guesswork. 

I can take a guess and going complete circle the non performing loans will be far higher than the 3 percent presently being stated. 

[Brierley]

2 minutes ago, itsari said:

I can take a guess and going complete circle the non performing loans will be far higher than the 3 percent presently being stated. 

Possibly, possibly not! People forget that it's the central banks job to help prevent that from happening. That's why we have debt moratoriums, that's why we have soft loans, that's why we have debt restructuring.

 

The other point to remember is that the NPL's get all the press, 3% of the loans is all that's ever talked about. Few people stop to think about the other 97% that are performing quite well and that's the vast majority of the economy!!! It's all a matter of perspective as if bad news attracts all the attention and the good news doesn't attract any.

 

Anyone who's looking for the NPL's to go higher is working against central bank thinking and the efforts of everyone involved, nobody else wants that. Of course, guessing what may or may not happen in a few months is a mugs game, perhaps try tea leaves or tarot cards.

[itsari]

4 minutes ago, Brierley said:

Possibly, possibly not! People forget that it's the central banks job to help prevent that from happening. That's why we have debt moratoriums, that's why we have soft loans, that's why we have debt restructuring.

 

The other point to remember is that the NPL's get all the press, 3% of the loans is all that's ever talked about. Few people stop to think about the other 97% that are performing quite well and that's the vast majority of the economy!!! It's all a matter of perspective as if bad news attracts all the attention and the good news doesn't attract any.

 

Anyone who's looking for the NPL's to go higher is working against central bank thinking and the efforts of everyone involved, nobody else wants that. Of course, guessing what may or may not happen in a few months is a mugs game, perhaps try tea leaves or tarot cards.

I certainly do not wish for more misery . But there is already much misery . Misery being when people can not pay there debts . 97 percent paying there loans is pure fantasy . 

Have a good day Mr Brierley 

[Brierley]

1 minute ago, itsari said:

I certainly do not wish for more misery . But there is already much misery . Misery being when people can not pay there debts . 97 percent paying there loans is pure fantasy . 

Have a good day Mr Brierley 

If only you could demonstrate how you calculate that, you know, show your workings.

 

Another poster the other day talked about his girlfriend who works in a branch bank and she says people aren't paying their loans. The fact that she sees what happens in only one branch of one bank and not what happens in the other 6,728 branches means her version of events is probably not accurate.

 

 https://www.bot.or.th/App/BTWS_STAT/statistics/BOTWEBSTAT.aspx?reportID=802&language=eng

[Airalee]

“we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system“

 

-Ben Bernanke

[Brierley]

9 minutes ago, Airalee said:

“we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system“

 

-Ben Bernanke

Thus proving that all bankers and anyone related to the financial sector are either liars or not competent, right?

[Mavideol]

27 minutes ago, Airalee said:

“we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system“

 

-Ben Bernanke

when I saw the first name it reminds me of a big well known bank/investment fraudster/financier Bernie Madoff

[Brierley]

Hmm, it looks like the train just pulled into trollsville, it's time to exit.

[Airalee]

1 hour ago, Brierley said:

Hmm, it looks like the train just pulled into trollsville, it's time to exit.

See ya later Saengd/Trillian/Brierly.

[AlfHuy]

I spoke last week with a lady, Masters agree, working as a teacher in a Government school.

She was more than depressed.

We spoke quite a while and she opened up a bit.

She was sucked into the quick money/quick rich scheme.

One of her friends made good money, trading Bitcoin.

She started the same and made some money. Her"ex-boyfriend gave her money and some of his friends too (to invest).

Initially all went fine. Later came the shock. She lost, tried to hedge the losses and lost everything.

Now, her ex and friends wanted the cash back, NOW.

One of the friend's father was a high ranking police officer.

Some people came around to threaten her. (as she told, 4 guys came with a gun to her flat).

 

She had to sell her land and was locked up. (Really?)

She came out of prison end last year because of Royal pardon.

 

I don't know if I can believe this story or not but she came across as telling the truth.

 

She had sold of her last piece of land and tried to recover some of her losses. Went again to "play" with Bitcoin.

We all know where this has gone over the last few weeks.

Now on heavy depression medication.

 

How many are out there, gambling, borrowing money they never can pay back.

How many want to impress the friends and neighbours with the new "fully funded" car.

How many are in the hands of the "loan mafia".

 

I know one girl who borrowed some cash from a shady Indian. She worked at a massage shop.

The guy turned up every day to get some money back.

She was just able to re-pay the interest.

Now, everything closed for ages, she has gone undercover.

 

There are 10s of thousands out there who do not appear in the statistics.

They have borrowed money from friends, family, colleagues, mafia.

Those are non-performing-loans and they run into Billions.

These will never appear anywhere in a statistic.

 

How many high rising buildings are just finished or just under construction. Who pays for it?

Banks are funding those projects and probably got already cold feet.

Prices are falling (negative equity).

Nobody buying off plan.

Nobody paying deposits which again would fund  to continue construction.

Half finished buildings doesn't help nor the banks nor the one, running the project.

 

They continue to build, hoping on a miracle.

Forget about. There are already too many empty buildings.

Many Thais were sucked into the "become rich" dream.

Buy a few apartments (no or very little own capital) and once finished, sell it with a profit (which profit and to whom?) or rent it out and the apartment pays itself through rental income.

There is nobody coming to rent. 

To be competitive, location must be right, nicely furnished and competitive price.

Many have not the funds to nicely furnish or lower the price because they are up to their throat in debt.

Half empty building: Not enough people to pay for the maintenance costs.

What will happen? No security, no cleaners, no maintenance, pool not cleaned etc.

Building quickly looking old and not attracting new potential buyers.

 

It's definitely a renters market and by far, we haven't seen the real pain yet.

 

Stay safe.