GSB president resigns after mass withdrawals

Economy February 19, 2014 00:00

By Suphannee Pootpisut
The Natio

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The president of state-run Government Savings Bank (GSB) has tendered his resignation after facing pressure on his decision to lend Bt20 billion to the government's troubled rice-pledging scheme, which led to a rash of withdrawals by customers.

Woravit Chailimpamontri’s resignation will be effective 30 days from yesterday.

Meanwhile, a group of businesspeople declared their support for the GSB, and some urged against using farmers as political pawns as they suffer from late payments under the rice-subsidy programme.

GSB’s board of directors yesterday cancelled a loan of Bt20 billion to the Bank for Agriculture and Agricultural Cooperatives (BAAC) and agreed to pull back a previous loan of Bt5 billion. The board will ask the BAAC to respond to a report that it would use the loan to pay farmers who are in arrears under the rice-subsidy programme.

Worawit said after the meeting that he had handed his resignation to the board to show his responsibility on this matter.

“I took a few days to decide to resign from the post as a result of pressure,” he said.

He said there was a level of distrust on whether he was a political tool of the government, running the bank to serve the government’s policy. Still, he insisted that lending to the BAAC did not violate any law.

The resignation was to show he was taking responsibility for the massive withdrawals the bank had endured as well as to restore confidence among clients and employees, he said.

Woravit took the helm in late 2012, succeeding Lersak Julates. There were three candidates for the post. Before joining the GSB, he was the president of Government Housing Bank.

Hundreds of GSB employees wearing black gathered yesterday morning at the bank’s headquarters to demand Worawit’s resignation. GSB employees also urged the bank to suspend its lending to the rice project, which has been struggling to pay farmers since the government took on a caretaker role.

Meanwhile, a group of 10 businesspeople were seen yesterday at GSB headquarters, in a gesture to show their unabated confidence in the bank, which saw Bt30 billion withdrawn by customers on Monday.

Joining them were executives of state enterprises and Salinee Wangtal, an assistant governor of the Bank of Thailand who is chairwoman of the Deposit Protection Agency.

Wiwat Theekhakeereekul, chairman of Car Mart, claimed that this group of businesspeople deposited about Bt1 billion with the GSB yesterday to show their opposition to financial institutions and farmers being used as political pawns.

“We don’t want a panic-driven bank run. Farmers are underprivileged and deserve sympathy, just as financial institutions do. Everything can cause a chain reaction, and this could affect the business sector. I admit that I’m concerned with the current political situation,” he said.

Sumet Damrongchaitham, president of Dhanarak Asset Development, a venture of the Finance Ministry, opened a new deposit account at GSB. He said this should indicate that confidence in GSB remained as a major mechanism to help farmers.

He noted that any wrongdoers in the rice-pledging scheme should be punished, but for fairness farmers should be spared from this chaos.

Salinee bought additional savings tickets worth about Bt30,000 to express her confidence in the state-owned bank. She noted that GSB remained a strong institution, without signs of a shortage of liquidity.

Asked whether withdrawals from GSB would pose a risk to the system, she said the situation was normal but would be closely monitored.

Caretaker Prime Minister Yingluck Shinawatra blamed the delay in making payments under the rice-pledging scheme on anti-government demonstrations.

“I’m very upset, and apologise to all the farmers who are suffering from the delays. The farmers are now in the middle of a political game being played by the protest leaders, who are refusing to follow the democratic and legal path. They should feel sympathy for the farmers who work hard for the sake of the country,” she said.

Deputy Prime Minister Kittiratt Na-Ranong, who is also the caretaker finance minister, has reaffirmed that the government has made all-out efforts to seek funds to pay the farmers in the rice-pledging scheme.

He agreed with Yingluck that the delay in the payments stemmed from the attempts to topple the government. He made a remark after meeting with some farmers who supported the pledging scheme.

Kittiratt added that he had considered that the farmers who had experienced late payments should be compensated with interest on the arrears.

He said he wanted to see the state-run banks supporting the government by providing credit lines to the farmers.

Meanwhile, thousands of farmers are scheduled to gather at the Commerce Ministry today at 8am to press for Yingluck’s early resignation. After that, they plan to split up to march to other government agencies and block access to them.

Surasak Riangkrul, director-general of the Foreign Trade Department, said the Commerce Ministry was able to sell about 600,000 tonnes of rice to 10 traders at a recent auction, which should generate an additional Bt20 billion. The money should be forwarded to the BAAC in short order for payment to farmers.

Caretaker Deputy Commerce Minister Yanyong Phuangrach said the ministry would meet today with farmer representatives and millers to discuss the overdue-payment problem and how to resolve it quickly.

A rice-miller source said millers planned to set up a fund to help farmers by using their pledging documents as a guarantee. About 100 millers could jointly set up the fund, with initial capital of about Bt200 million.