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Published on October 24, 2007

Several have launched short-term fixed deposits and bills of exchange.

Bangkok Bank offers three- and six-month maturity for bills at 2.6 per cent a year and 2.75 per cent over 12 months. Customers must deposit a minimum of Bt1 million.

Executive vice president Ruchanee Nopmuang said the benefits for investors were low risk, a fixed return and a determined period of investment. Interest is higher than fixed deposits of the same maturity.

Kasikornbank offers three- and six-month bills at 2.6 per cent and 2.8 per cent per annum, respectively. The minimum deposit is Bt1 million.

Siam Commercial Bank has a seven-month fixed deposit with annual interest of 2.6 per cent. It is considering offering six-month bills with a minimum deposit of Bt500,000.

Executive vice president Rungruang Sukkirdkijpiboon said short-term bills were suitable for wealthy clients.

Interest rates are expected to bottom out by the end of the year, before creeping up again in the third quarter of 2008.

The short-term bills will allow banks to raise funds at below market cost.

"I think most banks believe interest rates will bottom out, thus they have a clearer picture to support decision-making. Right now, market interest rates are quite stable, allowing banks to forecast funding costs easily," Rungruang said.

Many believe the economy will improve next year after the general election. Banks are raising funds for an expected business expansion next year, he added.

The Deposit Insurance Institution Act will force banks, particularly smaller ones, to raise funds to meet its regulations.

Rungruang said his bank's seven-month fixed deposits aimed to increase the number of customers, along with its expansion of branches and automatic teller machines. It is the country's third-largest bank but has the most branches and ATMs.

Bank of Ayudhya executive vice president Tak Bunnag said it was considering bills of exchange. He said their higher returns would be interesting for high net-worth customers.

Somruedi Banchongduang

 The Nation