Banking industry must gear up for AEC: BBL

Bangkok Bank president Chartsiri Sophonpanich said yesterday that Thai banks should focus on the upcoming AEC, especially competitiveness in services and products.

Bangkok Bank, the largest commercial bank in terms of assets, is focusing on two points with regards to preparing for the AEC: how it can provide products and services to deal with customer requirements, and how to handle risk from the AEC, he said.

The competitiveness of the banking system can help strengthen other businesses, he said.

Bangkok Bank recently gave the green light to its wholly owned subsidiary, Bangkok Bank Bhd, to open four more branches in Malaysia to strongly penetrate the market – from retail to corporate customers.

Pakorn Partanapat, executive vice president of Kasikornbank (KBank), said the bank is negotiating with local banks in Indonesia, Laos and Singapore to prepare for the AEC.

KBank currently has two partners in Vietnam – Agricultural Bank and the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), the fourth-largest bank in Vietnam – to provide services and convenience to KBank customers who have operations in Vietnam.

He said as a short-term plan for the AEC, KBank will encourage SMEs to expand their business into Asean by using business-matching strategy. In the long term, KBank will consider setting up branches over there and or set up joint-venture commercial banks in Asean.

KBank has 50,000 SME clients who have trade finances with Asean countries, representing 20 per cent of SME outstanding loans of Bt430 billion.

Garment, apparel and furniture are the first three industries that are expected to be affected by the AEC due to the higher operation cost, especially labour cost, and may not be able to compete with other countries in region.

"We, therefore, have recommended operators to move their operations to neighbouring countries that have lower labour cost," he said.

Pakorn said that AEC is a crucial area of focus on the national agenda which Thai business operators, including SMEs, must understand and prepare for, as they presently have constraints in terms of capital, knowledge and adjustment for the direct and indirect changes.

Kbank, in cooperation with eight local organisations, will present the "AEC: National Agenda for SMEs" to prepare Thai SME operators for the AEC single market in 2015. The intensive training courses under K SME Care will provide content related to AEC.

Chartsiri, who is also chairman of the Thai Bankers’ Association, said that the board rates are likely to slowly decrease as the policy rate has been cut. Before the cut in policy rate by 25 basis points at the last meeting of the central bank’s Monetary Policy Committee on November 30, commercial banks did not raise their board rates.

Chartsiri said that commercial banks are planning to cut board rates soon.

TMB Bank is only the bank to cut its deposit and lending rates, effective on Tuesday.

He said the overall liquidity in the Thai banking system will be sufficient to support banking business operations and loan growth in the first quarter next year as there will be more demand for loans for the country’s rehabilitation in the aftermath of the floods.