"We don't know what will happen next and we are concerned that problems will arise later," Bangkok Bank's executive vice president Ladavan Tanatanit said last week.

Foreign property developers typically use loans to finance half the value of a project and use their own money for the balance, she said.

The Foreign Business Act is being amended to include a clear definition of who is classified as a nominee. The issue came under the spotlight after Aspen Holdings and Cedar Holdings, two units of Temasek Holdings which acquired a controlling stake in Shin Corp from the family of ousted prime minister Thaksin Shinawatra, were accused of being nominees.

Bangkok Bank is one of the biggest lenders to foreign property developers in Thailand and a number of its borrowers are Singapore-an, said a source in banking circles.

Kasikornbank executive vice president Boontuck Wangcharoen said not all foreign property developers breached the Foreign Business Act.

The real-estate business is in a slump due to consumers' concerns over higher interest rates and oil prices, he said, adding that his bank extended a small number of project loans to foreign property developers in Thailand and the bank's scrutiny was quite stringent.

In November, Bangkok Bank's overall loan growth was down 0.2 per cent month on month, possibly due to loan repayments, KGI Secu-rities (Thailand) said in a recent report.

Siam City Bank and Siam Commercial Bank (SCB) were the most active lenders last month. Bangkok Bank's lending growth over the first 11 months of the year was 4 per cent.

SCB showed the strongest growth during the period, up over 12 per cent, and was the only bank to surpass its own and KGI Securities' loan-growth target of 10 per cent. The highest growth sector is small and medium-sized enterprises.

KGI Securities said its estimation of overall bank-loan growth of 5.7 per cent was achievable as cumulative loan growth continues to rise, standing at 5.2 per cent during the first 11 months of the year.

KGI Securities said loan growth had come out in line with its expectations. The rise in excess liquidity is a factor that should be watched closely, but is still not that severe.

The securities firm also said it maintained "overweight" for the banking sector with Kasikornbank, SCB, Bangkok Bank and Krung Thai Bank as its top picks.

Somruedi Banchongduang

The Nation