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Published on October 16, 2007

Bank of Thailand (BOT) assistant governor Sorasit Soontornkes said recently that two financial institutions had been in talks with foreign investors who plan to buy their stakes from the parent bank. He declined to disclose the names or whether they are finance or credit foncier firms.

The two companies plan to return their licences for finance and credit foncier business to the Finance Ministry and become leasing companies. After leaving their area of business, they will not be able to take deposits from consumers, Sorasit said.

Moreover, another two financial institutions have already ceased operations and will soon return their licences to the Finance Ministry, he said.

These four institutions either did not ask for upgrading to commercial banks or failed to be win such an upgrade in line with the central bank's Financial Master Plan phase I.

Under the plan, the BOT wanted to reshape the industry by keeping only commercial banks to function as deposit takers. As a result, finance firms and credit foncier were required to merge with parent banks, upgrade as commercial banks, turn themselves into credit institutions or leave the business.

Sorasit said the central bank had not set a deadline for the four companies to implement their plans, as it acknowledges their ability to run their businesses. However, they have not yet sent their business plans to the BOT.

"These financial institutions, being left in the industry, do not cause any significant impact on the system and they can take care of themselves," he said.

The companies are, however, reluctant to return their licences because, if they do, they are obliged to charge their customers interest not exceeding 15 per cent a year, leading to lower interest income.

Anoma Srisukkasem

 The Nation