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SME Bank to raise $500m via five-year FRCD

THE Small and Medium Enterprise Development Bank of Thailand plans to expand its long-term funding by issuing a five-year Floating-Rate Certificate of Deposit (FRCD) worth US$500 million (Bt16 billion).

President Manoonrat Lertkomolsuk said the bank needed to adjust its funding structure in line with its practice of allowing medium and long-term loans to SMEs.

At present, short-term funding worth Bt70 billion accounts for 78 per cent of its loans. Hence, the bank's plan to raise $500 million through the FRCD, coupled with its plan to borrow between Bt3 billion and Bt5 billion in the domestic market, will adjust the proportion of its short and long-term funding to 50:50.

Manoonrat said a New York mutual fund manager was interested in the bank’s fund-raising plans.

The FRCD will mature in five years with an annual interest rate of about 4 per cent. The issuance fee is estimated at $1 million.

The FRCD offers greater funding flexibility and longer borrowing period, the bank's president said. At present, the company relies heavily on big depositors, mainly state enterprises. However, these clients only deposit money for short periods.

The bank, capitalised at Bt2.55 billion, is now awaiting the Finance Ministry's approval for an additional capital injection of Bt2 billion.

The bank lent Bt7.4 billion in the first nine months of this year, with Bt5.6 billion in October alone. It expects its total outstanding loans to hit Bt94 billion by the end of this year, lower than its target of more than Bt100 billion, some customers have refinanced their loans while some have already paid up. Its outstanding loans stood at Bt96 billion last year.


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