Thai's bad debts set to rise<\/p>\n
Associated Press, Bangkok<\/p>\n
Official bad loan totals for Thailand's financial institutions
\nare set to balloon when the central bank adopts international
\nstandards for tallying unrecoverable loans, the bank announced
\nFriday.<\/p>\n
Bank of Thailand Governor Pridiyathorn Devakula told reporters
\nthe bank plans to include uncollateralized loans that have
\nalready been written off in its reports of bad loan statistics in
\nthe nation's financial system.<\/p>\n
The practice, required by international accounting standards,
\nhas not been followed in Thailand before. The governor did not
\nsay when the bank would adopt it.<\/p>\n
Pridiyathorn said U.S.-based credit ratings agency Standard &
\nPoor's recently appraised bad loans at Thailand's banks and other
\nfinancial institutions at almost double the official Thai
\nfigures.<\/p>\n
S&P said Thailand's bad loans totaled 843.31 billion baht
\n(US$19.88 billion) at the end of June, compared with the Thai
\ncentral bank's publicly declared figure of 465.91 billion baht,
\nPridiyathorn said.<\/p>\n
\"The S&P figures are right,\" Pridiyathorn said. \"The actual
\nnon-performing loans are higher than we reported. We accept that.
\nWe will adjust our calculation method to the international
\nstandard.\"<\/p>\n
Yet Pridiyathorn said the looming rise in reported bad loans
\nwon't likely cause problems for the financial sector because the
\nnation's banks have set enough money aside to write off
\nunrecoverable loans.<\/p>\n
Non-performing loans - a legacy of the Asian financial crisis,
\nwhich was triggered by a plunge in the Thai currency in 1997 -
\nhave dropped dramatically from a peak of 2.73 trillion baht, or
\n47 percent of total lending, in June 1999.<\/p>\n
International ratings agencies, however, have expressed
\nconcern that the bad loans will act as a drag on the economy as
\nbanks trim lending to concentrate on writing off problem loans.<\/p>\n
They've also criticized companies that have transferred their
\nbad debts to asset management corporations, merely shifting the
\nbad loan problem to another sector.<\/p>",
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