Thailand fights run on deposits
Thailand fights run on deposits
BANGKOK (AFP): The central Bank of Thailand yesterday moved to try to brake a US$1.2 billion run on deposits at the country's troubled finance companies and credit fonciers, but payouts continued apace.
Depositors have cashed in almost 30 billion baht ($1.2 billion) worth of company promissory notes since last week, according to figures supplied by senior central bank officials.
Ten finance companies and credit fonciers publicly ordered on Monday to raise registered capital accounted for nearly 10 billion of that figure, said Suwit Nivartvong, director of the central bank's financial companies and credit fonciers examination and analysis department.
Total withdrawals in the sector Wednesday were about the same as Tuesday -- at between nine and 10 billion baht -- mainly due to one company, otherwise the situation was improving, he said.
The company, which could not be named, paid out two billion baht to depositors yesterday, Suwit said.
But other observers said the withdrawals were slowing amid improved confidence.
The release of a central bank statement late Tuesday clarifying Monday's measures and clearly backing deposits had helped stem the tide, said Swangchit Chaiyawat, department manager of the central bank's Financial Institutions Development Fund.
"Confidence among depositors in finance companies has been restored by the Bank of Thailand's statement," Swangchit said.
The bank announced it would guarantee the cash-strapped firms' promissory notes and extend collateral-free loans, estimated at up to 40 to 50 billion baht ($1.6 to 2.0 billion).
On Monday Finance Minister Amnuay Virawan announced a rise in reserve requirements for all financial institutions and forced capital increases as needed.
Seven finance companies have already requested help with their liquidity problems, Swangchit said.
"Some finance companies have requested that the fund guarantee repayment of promissory notes issued to depositors, while some have asked for funds," she said.
She expected the amount to be loaned out from the central bank's development fund to be limited, however, with improving confidence.
"I think the total loans expected to be extended to financial institutions will not be over 40 to 50 billion baht because today the level of panic has declined," she said.
Pitsanu Santranunt, president of Country Finance and Securities, one of the 10 firms named Monday, said the company has asked for assistance following withdrawals of 250-260 million baht in the past few days.
Virattana Iew-aksorn, senior vice president at one of the three listed companies among the 10, ITF Finance and Securities, said his firm had also applied for assistance following withdrawals of around 500 million baht.
The two companies have criticized the central bank for undermining confidence by naming them publicly. Executives at other affected companies were not available for comment.