Thailand

LivinLOS · #1 07-03-2006, 13:45

Commercial banks announce an increase in savings interest

Following announcements by the Kasikorn and Siam Commercial Bank that there will be an increase in interest rates, many other commercial banks have made similar announcements.

The Bank of Ayutthaya has increased its 12 months savings interest form 0.25% to 3.25%, and loan interest from 0.25% to 7.25% for MLR and 7.75% for MOR and MRR. Meanwhile, Siam City Bank has increased its 12 months savings interest to 3.25% and its loan interest to 7.25% for MLR and 7.70% for MOR and MRR.

The Thai Military Bank, the 5th largest banking institution in the nation has increased interest rates of 12 month savings to 4%, 24 month savings to 4%, and 36 month savings to 4.25%. The Thai Military Bank's loan interests are at 7.25% for MLR and 7.75% for MOR and MRR.

The Bangkok Bank similarly announced that its 12 month savings interest would now be 3.25-4%, 24 month savings will be 4%, and 36 month savings will be 4.25%. Loan interest for MLR will be 7%, MOR 7.25%, and MRR 7.5%.

This increase in savings interest by commercial banks was made to complement market conditions and the banking interest policy of the government.

Source: Thai National News Bureau Public Relations Department - 07 March 2006

LivinLOS · #2 07-03-2006, 13:52

Now this talks about 'savings rates' but its basic interest rates accross the board.. Major jumps in effect !!!

The suspicious cynic in me says that the timing of this with Wakky tacky on the ropes and the slim chances of unrest might be a covering move to firm up the baht exchange rates..

Also one of the big drives of the TRT has been to get poor communities effective and affordable loans.. Get them out of the loan sharks and 5 for 4 chinese money lender schemes. What heppens to thier loans when loan interest goes from 0.25% to 7.25% ?!?!? Thats a 2800% rise isnt it !!! imagine if your morgate payments just rose by 2100% overnight or your car payments ?? Seems to me this is bigger news than it sounds..

Even a armchair economist knows your base rates control the speed of money flow and currency values.. its a delicate balancing act between many factors that keep the economy stimulated, your currency within ranges, industry can afford to finance etc.. Jumps like this says to me that they are yanking on the controls ??

K2 · #3 07-03-2006, 13:54

This is not a good sign - it suggests that Thai banks are having problems funding their debt exposure - in the run up to the elections and what ever uncertainty comes about, now is not the time to invest or keep money on deposit. Watch too for possible foreign exchange volatiliy (THB weakness).

LivinLOS · #4 07-03-2006, 13:58

Yeah we all know what happened last time 'debt exposure' got too high.. The shell structures of the unfinished skyscrapers still are there for all to see in BKK's skyline (though unsurprisingly enough the latest boom cycle has consumed most of them)...

Things are getting a little more erm.. interesting though...

Sirgezza · #5 07-03-2006, 19:51

Quote:

Originally Posted by K2

This is not a good sign - it suggests that Thai banks are having problems funding their debt exposure - in the run up to the elections and what ever uncertainty comes about, now is not the time to invest or keep money on deposit. Watch too for possible foreign exchange volatiliy (THB weakness).

No change yet Kev, but in my selfish mind I thought ''Great, even cheaper holiday next time'' assuming the rates went up to something like 90 baht to the pound. Could be bad news if you have stuck money in to investments in LOS recently, so I hope people can cover themsleves somehow.

Is the Thai economy likely to crash again? It is a massive jump in rates.

LivinLOS · #6 07-03-2006, 19:56

I really dont know.. Just seems like an insane rate of change..

I know inflation has been really hitting on a basic level.. The diesel price change. The gov dropping fuel subsidies even to wage inflation etc..

Might be a way to attempt to knock down a overheating economy through massively slamming on the brakes to industry but it just seems sooo large a change.. The whole world watches for a 1/4 basis point change in the dollar and debates the ramifications..

I actually find it hard to believe... Should be bigger news than this IMHO..

Sirgezza · #7 07-03-2006, 20:08

Are the commercial banks trying to get rid of Toxin? With forthcoming elections this move in interest rates could be a way of motivating people to vote against him?

alibaba · #8 07-03-2006, 21:45

Quote:

Originally Posted by gez

Are the commercial banks trying to get rid of Toxin? With forthcoming elections this move in interest rates could be a way of motivating people to vote against him?

You might just have something there gez.

LivinLOS · #9 07-03-2006, 22:37

The article is a Thai translation error.. They mean its a 0.25 raise to each of those levels not a change from 0.25 to those levels..

According to other news sources and ThaiVisa..

No need to panic.. theres nothing to see.. please move along...

LivinLOS · #10 07-03-2006, 22:41

http://www.bangkokpost.com/breaking_...s.php?id=83451

Quote:

Thai banks raise interest rates

Some of Thailand’s leading banks have taken the step to hike their interest rates ahead of the Monetary Policy Committee meeting scheduled for later this week.

Following the lead of Kasikornbank Plc, the country’s fourth largest commercial bank, Thai Military Bank Plc and Bank of Ayudhya have all announced that they would follow suit by increasing their lending rates.

Bank of Ayudhya, one of the leading commercial banks, said that it had increased its 12-month fixed deposit rate and also increased its lending rates by 0.25% effective from tomorrow.

“The increase this time is on both sides, deposits and lending, by 0.25% and follows the lead of Kasikornbank,” Mr. Tak Bunnag, executive vice president of BAY said.

BAY said that its interest rate for 12-month deposit would be 3.25 to 4.25%, while its 24-month deposit rate would stand at 4% and 36-month rates at 4.25%.

In regards to the lending rate, BAY said that its Minimum Lending Rate (MLR) would rise to 7.25%, while Minimum Overdraft Rate (MOR) and its Minimum Retail Rate (MRR) would rise to 7.75%.

Thai Military Bank, also followed suit, announcing that it too would hike its lending rates by 0.25 to 0.50% with immediate effect.

Subhak Siwaraksa, president and chief executive officer of TMB said that the hike in deposit rates would only be made after the March 8 meeting of the Monetary Policy Committee.

Bangkok Post

K2 · #11 07-03-2006, 22:49

Sef - Sorry that your application to the post of senior armchair economist to the BoT is hereby rejected.

Really when you can get 4.5% + in US deposits ..see this site...

http://www.gerealestate.com/gere/mar...es.asp?page=us

.... then why on earth would you want to stick money on depo in Thailand at 3.25 - 4.00% ??? With the risk factor the only thing astonishing is why depo rates arnt 400bp over US. (i.e. Thai depo rates should be more like 8%+ ... in 1997 10yr Thai Gov bonds where yielding 15% ... fantastic investiment ...can only dream about getting that again).

If your wondering about this - I found this decent glossery while looking for current G10 depo rates.

http://www.mgforex.com/eng/analysis/...ssaryPrint.asp