BOT vows to minimise pain when higher fees are levied

 Bankers, however, are concerned that the higher fees to be collected by the central bank would make them less competitive in relation to their Asean counterparts.
 The BOT yesterday clarified its position to the House of Representatives Committee on National Debt Solution in regard to the draft executive decree, which would shift responsibility for repaying the huge FIDF debt to the central bank.
 However, all members of the committee were at the same disadvantage as the central bank, in that none had seen the actual draft of the decree, said BOT Assistant Governor Chanchai Boonritchaisri.
 He said commercial banks had reiterated their concerns on three matters. The first is that the financial institutions in existence today had not caused the Bt1.4 trillion worth of financial damage to the country, and that the debt had been racked up due the bailing out of lenders after the 1997 Asian financial crisis.
 Their second concern is over the planned higher contribution level, which should take the financial system’s future stability into account, Chanchai said. This would be crucial when the Asean Economic Community (AEC) came into being in 2015, resulting in intense competition among regional banks.
 The third point involves the need for equal treatment among all banks, both commercial and state run. Currently, commercial banks are required to contribute 0.4 per cent of their deposit base to the Deposit Protection Agency (DPA), while state-run specialised financial institutions are not.
 The FIDF, which currently manages its own assets, will be required to clear its debt as designated by the draft executive decree, but an important question arises over its future role, he said. That is, whether it would only manage the Bt1.14trillion debt, or would its other functions also be transferred.
 The FIDF’s objective is to implement financial support measures for rehabilitation and the development of financial institutions, especially during a financial crisis.
 As regards the issue of higher premiums levied on commercial banks, Chanchai said the BOT would choose a solution with a minimal impact on both banks and consumers. However, it had to be realised that any solution would have a negative effect on the banks, and that they would in turn pass the cost on to their customers.
 Korbsak Pootrakul, an executive vice president of Bangkok Bank, said the current premium of 0.4 per cent of deposits paid to the DPA was already considered too high a burden for commercial banks.
 If the authorities had to collect more premiums, they should think about the impact on the competitiveness of local banks, as Asean institutions would be allowed to do business in Thailand under the single-market agreement of the AEC from 2015, he said.
 The existing levy also puts commercial banks at a disadvantage vis a vis state-run banks, which are not required to pay a premium, he added.
 Meanwhile, Pheu Thai MP Chalard Khamchung yesterday defended the use of emergency decrees, arguing that the government needed to raise funds to finance post-flood reconstruction projects.