BOT going to hurt local banks?

I touched on the fact that the government was trying to transfer the FIDF (Thailand’s loans from the ’97 asian financial crisis) from the government’s balance sheet to the Bank of Thailand’s balance sheet. And now there is a recent development, according to local news today the BOT Governor is exploring ways to make up for the deficit in FIDF interest expenses and may:

1.) charge fees on BE’s of 0.35% and require banks to share corporate tax cut benefits back to FIDF funds.

2.) This would raise FIDF income by around THB 16 bn p.a. and together with current funds it would then be able to meet the annual interest expenses of THB45-46bn (isn’t it shocking that Thailand is still paying back so much to the IMF, reminds of the book “Confessions of a Economic Hitman”)

3.) This is of course absolutely negative to commercial financial institutions with analyst consensus predicting that the large commercial banks (BBL, KTB, SCB, KBANK, BAY) likely to take a 8-9% hit in net profits and small firms like Tisco to take a 19% decrease in net profits.

Apparently the BOT governor will discuss this with the banks on the 12th Jan, lets see how this unfolds…

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