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Previously, Mr. Hellemans was managing director of ING Group, head of Credit Capital at ING Bank, Amsterdam, and managing director of ING Vysya Bank, India. What is overall situation of nonperforming loans and

What is the target for this year?

The gross [amount of] NPLs is 16 per cent or approximately Bt68 billion. (The interview was done on April 27) The percentage is also influenced by the loan book which has shrunk, although the NPL amount doesn't change. The net NPL - which is more relevant - is 7.5 per cent. In the end, the full impact of the NPL will rely on the collateral - land and buildings. As far as a forecast is concerned, I'm not inclined to provide a forecast.

But we do make an internal forecast, which we review on a quarterly basis. The numbers have changed everyday. To make a forecast is very difficult. So, what we do is we have all kinds of mechanisms and tools and processes in place that tighten to track accounts that show signs of weakness. And hopefully able to address it before it becomes an NPL.

What is the GDP forecast? Is it negative five per cent?

Yes, negative five. But we have done a stress test of negative 19 per cent. I forecast that in the end,in Thailand as a whole, NPLs would show dramatically this year. TMB's NPL would be less of an increase compared to the industry as a whole, because TMB has not grown. We in fact have minus growth. A lot of banks show growth. It (the NPL level) depends on banks' restructuring and borrowers' ability to meet restructuring obligations.

How big will that increase be?

It is going to be significant. TMB Bank didn't grow rapidly over the past couple of years. In 2007, we focused more on capital increase, in 2008 we're in a transition period. Even in 2009, we've gone through a lot of changes that are more internal.

What were the signs that debtors in several industries would become NPLs?

In the fourth quarter last year we reviewed the whole portfolio. We identified the accounts that showed signs of weakness and we thought in the end - in only a matter of time they would become NPLs. Also last year, we tightened the underlying norms which are the minimum criteria loans have to comply with. We also decided that in certain industries, we won't do it anymore. For example, for SME clients we don't do real estate unless they're expansion projects. For the hotel industry, we've already restructured all hotel loans before yearend because we knew this was in a slowdown environment, on top of the political issues. The airports' closure happened in the middle of our restructuring. The impacts would be felt during Q4 and Q1. As far as industry, I think it's across the board. But there're some industries that were hit very fast such as steel, construction, hotel, tourism, and textiles At the same time, the big portion would be SMEs including autoparts and electronics. In agriculture, you would see rubber and the shrimp industry. State enterprises also were hit by the current crisis, even though they received budget from the government. But there were also budget constraints.

How about consumer loans, in particular mortgages?

In our mortgage portfolio we haven't seen any significant change. If you want to buy a condo for yourself, it's okay. But if you want to go for the real estate development project, we're a lot more cautious on that. People are more cautious and we see the impact on demand for housing which would also impact land developers. From the real estate point of view, we're going to see a slowdown.

I'm not very optimistic about Thailand 's economy. But the government is applying the stimulus on domestic demand. The intention of the government is there. But the ability to translate that into reality is a bit more difficult due to political issues.

To prepare for debt restructuring, how has the bank reorganised its workforce or debt restructuring units?

In total, retail and wholesale [staff] should be about 115. But it's more an issue of identifying the role of responsibility. You need to have someone without a conflict of interest. The debt restructuring team by definition is not driven by revenue. It's not the question of how many people you have, but a question of how good they are.

You've mentioned change in the process. Please elaborate.

For example, when it comes to small SMEs which had been dealt with at the branch level. The branch managers were responsible for that. That's not the case anymore. So, all the NPLs at the branches are now being dealt with by our restructuring team. The branches don't even provide information,they just transfer the files and all documentation and everything else. The process has been changed since November. It's practical and easier to manage accountable responsibility.

You've talked about relationship managers, do they have more roles currently?

To the contrary, as far as loans are still performing, risk management doesn't have a role. In times of difficulty, the first person who should know is the relationship manager. However, the RM is quite prejudiced or biased. What you need to do is have an early warning system. In the end the RM is not able to make the hard decisions. There's a special requirement of not being nice. We appointed our debt restructuring people and they take the primary relationship. The RM is secondary or put in the backseat. The question is, they're always good. So, you need somebody who has no history with clients to be neutral and able to take hard decisions.

How do you compare the situation of current NPLs with 1997?

It's not comparable. 1997 was a totally different scenario with different roots in the cause of its problems. 1997 was the Asian crisis, while today it's the global economy. In 1997, Thailand was not exposed so much to the world economy. Thailand changed to be an exportoriented economy after 1997, which was the solution to 1997 but is the problem for 2009. Banks and borrowers have learnt from 1997. But 1997 is a long time ago. If you look at demographics of Thailand, how many people remember what happened in 1997? So many people were young at the time. Most companies I see, like SMEs for example, while their equity might be better, they are sitting on negative working capital. Which means you're still using shortterm money to do longterm investment. There's still a funding mismatch that creates liquidity problems. 1997 also focused on concentrated impacts, but today everybody is going to be impacted. The solution to the problem is going to be a lot more difficult than 1997 for the entire economy. In my view, I don't see the economy improving until the second half of 2010.

What are the key factors that banks would see in order to provide more loans to clients?

There're two magic words: willingness and ability. A lot of borrowers just don't want to talk to you. Just walk away. So the first thing is you need to see a willingness in the borrower, a recognition he has a problem and needs help. Second thing, does he have the ability? Can he solve the problem that at some time in the future he can pay back? The third is to what extent, which is linked to willingness, do you want to put your money into the business? If you want to help me, I'm going to help myself.