Pattaya Daily News

07 November 2008 :: 11:11:50 am 40660

Bot Ready to Encourage Banks to Help Boost Liquidity

BANGKOK, Nov 7 - The Bank of Thailand is ready to discuss with the country‘s commercial banks ways to ease their lending criteria to encourage them to help boost liquidity for various kinds of business if the economy experiences a sharp slowdown, according to central bank Assistant Governor Krirk Vanikkul.
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He affirmed that the condition of domestic commercial banks as a whole remains stable, with Thailand’s banks having sufficient liquidity to extend loans to various kinds of business.

No sign of pressure has been witnessed in inter-bank borrowing with the inter-bank rate still moving in a normal range.

At present, excess liquidity in the banking system remains as high as Bt1.06 trillion, while the capital-to risk asset ratio continues to stay high at 15.7 per cent.

However, the Financial Institution Policy Committee, which held its first meeting Thursday, expressed concern over the impacts of the global economic slowdown on the Thai economy.

The committee believed that the local repercussions would become clearer in the fourth quarter of this year and the whole of next year.

Should the Thai economy actually slow down, he said, the country’s commercial banks might need to lend with greater caution, which could cause a liquidity shortage in the business sector.

Should the problem really occur, the BoT would invite executives of commercial banks to discuss ways to ease the lending criteria so that they could extend loans in a more flexible manner.

Mr. Krirk said the central bank would not attempt to compel commercial banks to lend more because the banks need to give a priority to their own loan risk management decisions.

He said Thai commercial banks earned a combined net profit of Bt24 billion in the third quarter of this year, down Bt2.3 billion from the second quarter, since they increased their loan-loss provisioning.

However, they obtained a combined net profit of Bt81 billion in the first nine months of this year, which outpaced the profit earned for the whole of last year by Bt57 billion, because loans expanded satisfactorily. (TNA)

Reporter : PDN staff   Photo : Internet   Category : Thailand News

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