KTB ready for major role in financing Bt2-trillion projects
Krungthai Bank (KTB) will play key roles as both a lender and the lead arranger of financing for the government's planned Bt2 trillion worth of infrastructure projects.
According to bank president Vorapak Tanyawong, the infrastructure projects will create a huge number of jobs and benefit supply-chain businesses.
He noted that participants in the projects will need to obtain funds from the money and capital markets - an area in which KTB is able to help by offering loans and finding funding instruments for customers.
He said that the funding assistance would be based on customers' requirements, adding that the role of the bank is to find good products that match customers' needs while creating a healthy margin for the bank as well.
Vorapak said that as a state-run bank, KTB could support loans for the infrastructure projects as long as margins were attractive. However, if margins are low while the cost of funding remains high, the bank's liquidity would be affected.
KTB's capital adequacy ratio is 15 per cent, regarded as sufficient capital to serve the infrastructure projects.
Vorapak said that all local banks and many foreign banks hoped to cash in on the Bt2-trillion government projects. The liquidity of the banking industry is sufficient to meet the projects' financial requirements, but liquidity should also be sufficient to cover any unexpected situations, he said.
Though KTB's capital position is strong, it is ready to offer funds to the government through the capital market such as the infrastructure fund, Vorapak said, adding that KTB hopes to be the lead arranger in financing for the government.
new team formed
"We have established a team to deal with the Finance Ministry in order to get information and follow the development of each project," he added. The bank's proportion of lending to the state this year is expected to increase from 11 per cent at present because of rising demand.
The country has not embarked on any mega-projects for many years, while experiencing many crises in terms of the economy |and natural disasters. Hence, the Bt2-trillion projects will bolster investment activity, Vorapak |said. Government investment is also being synchronised with the formation of the Asean Economic Community (AEC), he said.
Before Vorapak took the top job at the bank, KTB had reduced the proportion of state lending.
Vorapak insisted that the bank's policy on lending to the government is unchanged, adding that the bank would join bidding for state projects if they promise reasonable margins.
The infrastructure projects will benefit the private sector and |supply-chain businesses, which |are a focus for KTB, and the bank plans to offer solutions to private customers as well as state agencies.
The country's investment-to-GDP ratio is currently low and even though the Bt2-trillion budget is massive, the bank believes the public-debt-to-GDP ratio will not exceed 50 per cent. It currently stands at 40 per cent.
Vorapak added that the infrastructure projects are expected to materialise next year.