Vichit sugguests diversification of assets

Speaking at the seminar on the Asian Financial Outlook: The Next 10 years, Vichit said that one of the lesson that the commercial banks have learned from the 1997 financial crisis is that the commercial banks, until 10 years ago, tended to focus on wholesale banks. Thus, when big corporations collapsed, the commercial banks fell down.

"Thai  bank historically were wholesale financial institutions. Most of them put all egges in one basket."

For instance, from 1997 to 1999, the wholesale clients account for 85 per cent of the total banks' lendings. The consumer loans accounted for very little.

So when these big corporations faced the external foreign debt problem, the wholesale sector got hit. There were no protections.

These days however, the ratio of consumer lending rose. "We have seen some of the diversification. For instance, the ratio of consumer lendings of the total banking system rose from 15 in 1997 to 21 per cent now. At Siam Commercial Bank, the ratio went up from 18 to 41 per cent over the same period. - The Nation

Jeerawat Na Thalang