Big banks in better shape to thrive in AEC: Prasarn

Economy December 08, 2011 00:00

By Wichit Chaitrong
The Nation

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Smaller institutions may be unwilling or unable to meet criteria : BOT governor

Small banks will have a disadvantage compared with large institutions in capitalising on the opportunities presented by the expanded market under the Asean Economic Community in 2015 and financial liberalisation in 2020, the Bank of Thailand governor said yesterday.

“Thai banks should do more about their strategies to compete under the AEC,” Prasarn Trairatvorakul told a seminar hosted by National ITMX.

While the 10 Asean member countries agreed to liberalise trade in goods fully by 2015, the financial market will not be fully freed up until 2020, as some countries considered financial markets sensitive.

Prasarn has warned local banks that they should learn more about Asean countries.

On the regulatory level, central banks in the region are working out rules for Qualified Asean Banks (QABs), which are due to be announced late next year, he said.

Banks meeting the criteria will be the first to be granted a licence to operate in all 10 member countries.

Large banks would have an edge over smaller banks, he said, since the rules for QABs will focus on the size of the capital base, corporate governance and quality of management.

However, the new rules would not make much of a difference for Bangkok Bank, since it already has a solid presence in the region, he said.

Thai banks may prefer the large domestic market of 67 million consumers, so they are not eager to move overseas, while banks in smaller Asean countries have been more active expanding in Asean.

When Asean becomes a single market in a few years, there will be 600 million consumers. Thai banks should think about this, Prasarn noted.

The BOT has also re-examined the banking-liberalisation plan after Finance Minister Thirachai Phuvanatnaranubala recently urged the central bank to accelerate the opening up of the market.

According to the current plan, foreign bank branches can next year register as subsidiaries and expand up to 20 branches.

New bank licences may be granted in 2013 or 2014.

“We’re looking at it,” he said in response to a question about the possibility of a faster pace for market liberalisation.

Prasarn also urged local media to report more news about Asean.

“The media in other Asean countries have intensively covered Thailand and other countries in the region, but our media focus much more on Europe and the United States,” he said.