Fitch: Thai State Banks Resilient to Deposit Shifts

Stocks and Financial Services Press Releases Wednesday February 19, 2014 14:16
Bangkok--19 Feb--Fitch Ratings

The recent deposit pull-out from Government Savings Bank (GSB) highlights the potential risk that politics could play in undermining the Thai financial system, says Fitch Ratings. We had recently highlighted that the country's political turmoil has already raised the risk of a longer-than-expected slowdown, and ultimately greater credit pressure on the banks.

Deposit withdrawals from GSB appear to be of a manageable size for now. GSB reported that the net amount of the pull-out was around THB20bn on 17 February, while its total deposit base was THB1,724bn (as of August 2013). The withdrawals are related to public skepticism over GSB's new THB20bn credit line to the Bank for Agriculture and Agricultural Cooperatives (BAAC) in support of the government's rice subsidy programme - and motivated by political suasion rather than heightened financial risk. GSB has already indicated that it will cancel this credit line.

We think GSB's liquidity buffers, as well as the scope for policy-driven financial support from the central bank or from other state-owned institutions, should enable GSB to surmount any limited, near-term funding challenges.

One key risk, though not a central scenario, is an acceleration of deposit withdrawals from additional state-owned banks. This could place an increasing burden on inter-bank credit lines, and potentially the central bank.

At the moment, we believe the authorities are able to ward off near-term funding challenges for the state-owned banks. However, systemic risks are skewed to the downside - as a resolution of the political deadlock is not in sight, and the funding of the government's rice subsidy programme remains uncertain.

GSB and BAAC are both backed by acts of parliament, and are likely to obtain high levels of support. They account for 10.6% and 6.1%, respectively, of banking system assets (as of June 2013), and their stability is important for overall confidence across the Thai banking system.

Latest Press Release

TMB reveals TMB ABSOLUTE the latest credit card targets high-end customers Every Baht 10 spent earns 1 point

TMB reveals "TMB ABSOLUTE" the latest credit card targets high-end customers Every Baht 10 spent earns 1 point, no foreign transaction fees on overseas spending Including travel insurance coverage TMB launches "TMB ABSOLUTE" Visa Signature, a high-end...

Photo Release: TMB debuts new credit card TMB ABSOLUTE targeting high-end customers

Marie Ramlie, (centre) Head of Retail Products, TMB Bank Public Company Limited, together with Jaray Jianthanakanon (3rd from left), Head of Retail Lending Products, TMB, held a grand event to debut the new credit card TMB ABSOLUTE Via Signature. It is a...

Gossip News: Nattaphatt Tanboon-ek, New CFO of WHAUP

WHA Utilities & Power brought in a veteran - Nattaphatt Tanboon-ek as its new CFO. In addition to his vast experience in capital market, Mr. Nattaphatt is also a guru in the energy sector. Once taking the helm, he will immediately drive both the...

Photo Release: KTC joins hands with Family Mart and Lawson 108 in providing Bt. 10 cash backs.

Mr. Nattasit Soontranu, Vice President - Credit Card Business, "KTC" or Krungthai Card Public Company Limited, jointly with Family Mart and Lawson 108, provide members worthwhileness with Bt. 10 cash back E-Coupons by making transactions using KTC credit...

Dusk Network Announces Listing of DUSK Token on Bitfinex, Bittrex International and Ethfinex

- Listings on leading exchanges follow recent $8.1 million raise by Amsterdam based Dusk Network Dusk Network, a cryptographically transparent digital ledger, has announced today that its cryptocurrency, DUSK (ERC-20) token, has been listed on the...

Related Topics