Phairoj Hengsakul, the Bank of Thailand's (BOT) assistant governor, said the fund's burden from rehabilitating financial institutions was currently lower than the earlier forecast of Bt1.3 trillion, due mainly to higher-than-expected debt collection.

The FIDF's manager said the rescheduling would help the fund to obtain higher prices from asset sales, including land plots and stocks. The huge capital gain will lower the increasing burden it has carried.

"We wanted to close down the fund as quickly as possible, in 2009, but we have realised that the accelerated schedule will cause inefficient asset management," said Phairoj.

The fund closure is relevant to the schedule of assets and liabilities management, which is expected to be completed in 2012-13. This includes its debt collection, debt repayment and assets sales by 2012-13.

"The fund has avouched Thai Asset Management Corp's 10-year promissory notes, in which the validation is left for the next five years," he said.

Earlier the FIDF planed to shut down its operation before the Deposit Insurance Agency (DIA) was founded. The FIDF board, however, could not finalise which entities would take care of the fund's assets and liabilities. Many options were studied, including transferring the assets to the Finance Ministry or allowing the BOT FIDF unit to take responsibility.

The assistant governor said the DIA could be founded separately, although the FIDF had not been shut down because the two agencies had different functions.

The FIDF's responsibility is to rehabilitate any troubled banks that fail to recapitalise after BOT intervention. The DIA's is to pay back depositors of banks with financial problems.

Anoma Srisukkasem

The Nation