BOT move a boon for banks

BOT move a boon for banks.

The Bank of Thailand's 30-per-cent withholding measure will benefit banks by boosting their short-term loans, Kasikornbank executive vice president Boontuck Wangcharoen said yesterday.

He said the central bank's measure would make it difficult for large companies to mobilise short-term funds in overseas markets. Due to the central bank's withholding requirement on foreign funds, credit from abroad would indirectly be priced higher.

A downward trend of the country's prime lending rates this year will also encourage banks' large-sized customers to borrow domestically. The prime lending rate is likely to fall by 50 to 100 basis points throughout the year.

This would be in line with the trend for Thailand's policy signal rate, which is likely to be slashed by 25 basis points at the Monetary Policy Committee's meeting on January 17.

"The country's loan demand is still high as the average capacity utilisation has increased to 75 per cent. That has been supported by the country's strong economic fundamentals, although investment sentiment has been affected," Boontuck said.

However, large companies still needed to raise long-term funds from abroad to balance their liability portfolios. Domestic liquidity is also limited, he added.

Piti Tanthakasem, head of Kasikornbank's capital market department, forecast that corporate bond issuance this year would be worth between Bt152 billion and Bt200 billion, close to last year.

Somruedi Banchongduang

The Nation
Friday January 12, 2007