No bank needs bailing out, claims Surapong

"We have made an effort to strengthen banks and it needs time to seek the best strategic partners," Surapong said after chairing the opening of Money Expo 2008 at the Queen Sirikit National Convention Centre.

Prime Minister Samak Sundaravej had earlier made a controversial remark about the state of some unnamed local banks.

Surapong said Samak was just expressing his opinion about the effort to increase the competitiveness of some banks. The premier did not intend to say that some banks were facing financial trouble, he added.

"Strengthening of banks is necessary and some banks have to seek strategic partners in order to increase their competitiveness," Surapong said.

He did not reveal the names of the "weak" banks but the market focused on BankThai and Siam City Bank. The Financial Institutions Development Fund (FIDF), a financial arm of the Bank of Thailand, had to inject fresh funds into them in the wake of the 1997 financial crisis to keep them afloat.

The central bank and the Finance Ministry have been seeking new investors to replace the FIDF, which holds 42.13 per cent of Bank Thai and 52.41 per cent of SCIB.

Surapong also dismissed a report suggesting that the authorities are using Bt8 billion in new capital to support banks.

Bank of Thailand Governor Tarisa Watanagase insisted that all banks were sound and the government would still guarantee 100 per cent of deposit accounts in every bank for one year after the Deposit Protection Act takes effect on August 11.

Meanwhile at the Money Expo, participating state-owned banks were touting promotional loan packages.

The Small and Medium Enterprise Development Bank of Thailand has launched loans for small businesses that want to buy new vehicles powered by natural gas for vehicles with a flat interest rate of 4 per cent and repayment terms up to seven years.

The Government Housing Bank offers home loans with repayment terms up to 30 years. The interest rate is 3 per cent for the first three months and the minimum retail rate (MRR) minus two percentage points for the fourth to the 36th month. Then the rate would be floated for the rest of the term. The MRR is now quoted at 7.5 per cent.