Thai banks to receive cheap funding from the BOT

So this is why banks have continued to remain strong in the market…

Local papers reported that the BOT will offer THB 210 bn to Thai banks at a rate of 0.01% that will be meant for clients affected by the 4Q11 flooding. Local banks estimated that their clients require THB 366 bn in loans to due to the floods and the BOT has said that only THB 300 bn would qualify for this scheme.

So if you’re wondering why the banks are still up…well this will boost lending boost, as it will allow most commercial banks to easily surpass their lending growth targets for this year and they will all experience interest rate expansion as the cost of funding is ridiculously cheap.

We already shudder at the fact that the Fed and ECB gives out low interest rate loans to bankrupt financial institutions and bankrupt governments, albeit I do at times argue the¬†necessity¬†of it, I am surprised that more people here aren’t upset at the BOT giving free $ to the banks here in Thailand given that they already are some of the most profitability financial institutions in the region.

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