Thai banks open to foreign investment

Thai banks open to foreign investment

SINGAPORE (Reuters): Thai Prime Minister Chuan Leekpai on
Monday threw open the doors of the Thai banking industry to
foreign investment, urging more equity interest.

"In Thailand there had been extensive overhaul of laws and
regulations and it can be said there is now an open door for
foreign participation in our banking sector," he said at a
question and answer session at the East Asia Economic Summit.

"Last week for example, a bank in Singapore took an equity
stake in a Thai bank of over 75 percent. So I would now urge all
of you to take a similar stake in Thai banks," he said.

That deal between Singapore's United Overseas Bank and
Thailand's Radanasin Bank saw the Singapore group take a 75
percent stake in Radanasin for 15 billion baht ($383.6 million).

Chuan told reporters he saw interest from foreign players in
Thai banking institutions rising as confidence in the country
grew.

"There have already been foreign investors who have taken
equity holdings in four commercial banks in Thailand and with
increased confidence of an economy on the recovery, there is an
expectation that more foreign investors will be coming into the
banking sector."

Singapore's DBS Bank bought a majority stake in Thai Danu Bank
in 1998. ABN AMRO Bank of the Netherlands took a 75 percent stake
in Bank of Asia last year, while Britain's Standard Chartered
took a 75 percent stake in Nakornthon Bank last month.

Chuan said bank non-performing loans (NPLs), a major concern
of foreign investors, were going down but not as fast as the
government would like.

"NPL's have been declining but they have not declined as fast
as we would like to see. And it is expected by reports from the
Bank of Thailand that the reduction in NPLs will be more rapid in
the future," he told reporters.

The central bank said on Friday that Thai non-performing loans
stood at 46.76 percent at the end of August, a near half
percentage point improvement from the end of July.

The Thai Prime Minister said in his keynote address that
structural changes and economic reforms had to be extended to the
"regional and global levels as well."

He said structural changes, while not easy, had been taking
place in Thailand.

"I, however, do not wish to understate the problems and
difficulties we have been facing in pushing forward these
reforms. Though the process has clearly started, it is not yet
complete and much more remains to be done."

Chuan said the government had no gross domestic product
projection estimate yet but said he expected GDP to grow between
the second and third quarters of this year.

After contracting by around 10 percent in 1998, Thai GDP has
stabilized and most economists expect modest growth this year.

The International Monetary Fund said last week the Thai
economy should grow four percent in 1999 and any revision to this
forecast would be on the "positive side".