New bank set up to manage good assets of 56 Thai financial firms
Vithoon Amorn
Bangkok, Jan 20: The Thai cabinet on Tuesday approved the launch of a new state-owned commercial bank and two subsidiaries to manage good assets of 56 debt-ridden finance and securities firms that were closed by the government last year.Central bank governor Chaiyawat Wibulswasdi said the new Radhanasin Bank Plc, initially capitalised at four billion baht ($77 million), would bid in public auctions of the good assets of the defunct finance firms from mid-February. The Financial Sector Restructuring Authority, set up last year to separate the good and bad assets of the closed firms, has estimated that their total assets amount to about 800 billion baht, of which 200 billion are good -- saleable equity or property or loans that expected to paid. Deputy finance minister Pisit Lee-atham said structural adjustment loans from the World Bank and the Asian Development Bank would be used to initially capitalise the three bodies. The two subsidiaries would be capitalised at 500 million baht each."The
establishment of the three new financial institutions... will be a major step in solving the problems of our financial sector as well as restoring confidence of both domestic and foreign investors in the Thai financial system," a finance ministry statement said. Foreign investor confidence in Thailand was shattered by troubled finance companies that afflicted the finance sector and led to the country's worst economic crisis in decades. Thailand closed nearly two-thirds of its cash-strapped finance firms between June and August last year as part of a reform of its financial sector required by the International Monetary Fund in exchange for a $17.2-billion package of bailout loans. Governor Chaiyawat said creditors of the 56 finance firms would be given options to turn their uncollected debts into equity in the new bank which, despite its state ownership, would operate like an unsubsidised commercial bank. The central bank had earlier offered anxious creditors of the closed firms an option to exchange
their problem loans for five-year government guaranteed notes yielding two per cent. Vichit Surapongchai, former finance minister and president of Bangkok Bank Plc, said he would serve as Radhanasin Bank's first chairman. Chira Suriyasasin, president of Bookclub Finance and Securities Plc, was named chief executive.Vichit said assets acquired by Radhanasin Bank would be paid for either in cash or commercial debt paper issued by his bank. "We will be in the market as an asset bidder without any privileges over other participants. Our bids would be based on sound business decisions," the banker said. He said the new bank, planning to start accepting public deposits from March 1, would seek Thai and foreign strategic partners who could help boost its strength and efficiency. It would also list on the Thai stock exchangelater. The banker said future foreign ownership of the bank would be capped at less than 50 per cent to help retain its Thai status. "We will operate as a profit-oriented commercial
bank focusing on employing new banking technology with a long-term goal of being a universal bank," he told a press conference. Vichit said Radhanasin Bank would maintain a capital adequacy ratio of over 12 times its loans and risk assets, compared with the 8.5-times minimum set by the Bank of Thailand. Central bank governor Chaiyawat said the authorities would give full support to the new bank whose initial 200-member staff would partly come from employees of shut finance companies.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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