BOT 'stands ready' to help troubled SFIs

No formal request yet from Finance Ministry for assistance with state banks

The Bank of Thailand says it stands ready to assist troubled specialised financial institutions (SFIs) with their problems, but cannot act without an invitation from the Finance Ministry.

Yanyong Likhitcharoen, director for the BOT' Specialised Financial Institutions and Non-bank Examina-tion Department, said yesterday that the ministry "told us that there would be a request for our staff to help. We are waiting for that, but there [has been no request] of any formality. So we have not dispatched our staff yet."

BOT Governor Prasarn Trairatvorakul "has mentioned that we were pleased to help", Yanyong added.

The Islamic Bank of Thailand (IBank) and Small and Medium Enterprise Bank of Thailand are the state-owned SFIs struggling with high rates of non-performing loans (NPLs).

As for rumours that the ministry has asked for a special examination of IBank, the central bank has not seen any request yet.

"Usually, we examine them [SFIs] annually, as assigned by the ministry," Yanyong said.

The central bank has just examined the books of SME Bank and the results will be forwarded to the ministry. It is now examining the Bank for Agriculture and Agricultural Cooperatives (BAAC). IBank is coming up in two months.

The other SFIs are not a concern, he said. BAAC is involved in the government's rice-pledging scheme, but the government will take care of it.

If the government asks for the rules for SFIs to be made less strict than those for commercial banks, that depends on the Finance Ministry, he said.

"For commercial banks, if their BIS [capital adequacy ratio] were less than 8.5 per cent, we would send our staff to control their operations to see if they could survive. If they could, more capital would be injected. But if they could not, they must be shut down.

"But for SFIs, it depends on the ministry. We can't do much, as we're assigned to conduct examinations only," he said.

The SFIs plan to set up a Specialised Financial Institution Council next month to reduce business risk and cooperate in managing loans.

Worawit Chailimpamontri, president of the Government Savings Bank, said the SFIs had met several times now to set up the council and had drafted the business plan, which would be finalised this month.

The council will be a support centre to advise members on operations and to provide them information and training. It will also develop standards for SFIs to meet Basel III rules.

"This is our way to manage our SFIs to do business to meet targets and also reduce business risk," he said.