Two UK banks in Thailand confirm their financial status

The move followed the news that Britain's banks will get an unprecedented 50billion (Bt3trillion) government lifeline and emergency loans from the central bank after the freeze in credit markets threatened to bring down the financial system.

The government will offer to buy preference shares to help boost capital at eight banks: the Royal Bank of Scotland, Lloyds TSB, HBOS, Barclays, HSBC, Nationwide, Abbey National/Santander and Standard Chartered Bank.

In reaction to local media reports saying it was one of eight banks in UK seeking capital support from the UK government, HSBC in Thailand yesterday circulated a press release saying that HSBC Group has no plan to seek capital assistance from the UK government's bailout plan.

The group, it said, has solid financial status and doesn't have any liquidity problem. It said its total market capitalisation was worth US$190 billion (Bt6.5 trillion) as of Tuesday, with more than 100 million customers with represent total deposits of $1.2 trillion.

The group said it had recently helped inject threemonth and sixmonth liquidity into the interbank market in London by lending $2 billion to other financial institutions. It added that the group generated income from various regions in the world with various types of businesses.

Standard Chartered Bank (Thai) also held a press conference yesterday to insist that it still had firm financial status.

"Several articles wrongly reported that the move is to take over and nationalise the eight banks that participate in the scheme. Standard Chartered would like to clarify that participating banks are not all troubled banks. Some of the banks, including Standard Chartered, are 'good banks', strongly capitalised and highly liquid," Standard Chartered Bank (Thai) said in its statement released to Thai media.

"We do not need to apply for this capital - we are well capitalised and highly liquid. Standard Chartered remains a net lender to the interbank market," the local unit said.

It said the fact that Standard Chartered had been invited to participate reinforced the importance of Standard Chartered Bank to the UK financial system and was a collective effort to help stabilise the UK banking system as a whole.

Standard Chartered Bank (Thai) has currently 39 branches in Thailand, of which 31 are located in Bangkok. The bank's total lending and deposits as of the end of September were accounted at Bt85 billion and Bt123 billion, respectively.

 Standard Chartered Plc, the Londonbased bank that makes most of its profit in Asia, and Abbey National, the UK unit of Spain's Banco Santander SA, also said they would not seek capital from the government.

RBS, HBOS, Barclays and Lloyds TSB praised the funding plan and said they would study it before saying how they might use it.

 The UK bailout plan also guarantees about $250 billion of loans and increases the amount the Bank of England makes available for banks to borrow to at least $200 billion.

According to analysts at Sanford C Bernstein Ltd, the British government may own as much as 30 per cent of four of the country's biggest banks as it doles out the 50billion lifeline announced Wednesday.

"The proposed injection leaves the UK banks in a strong solvency position," Londonbased Bernstein analysts including Bruno Paulson wrote in a note to clients today. "The downside is of course that the capital raising implies dilution, with the government potentially taking 2030 per cent of the banks."