TMB, IFC to help flood-hit SME exporters
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TMB Bank, in cooperation with the International Finance Corp (IFC), a member of the World Bank Group, is to provide US$100 million (Bt3.16 billion) worth of long-term lending in US dollars to flood-affected small and medium-sized exporters seeking to cont
The programme will provide a credit line of $1 million per SME directly or indirectly affected by last year’s flooding and requiring capital to buy machinery to expand business and rehabilitate flood-affected production.
TMB Bank chief executive officer Boontuck Wungcharoen said yesterday that the funding was aimed at helping SME exporters reduce the risk from currency volatility and persuade more enterprises to access dollar-denominated loans.
SME exporters face higher costs when it comes to dollar funding because US liquidity is tightening.
They have to engage in foreign-exchange hedging to convert the dollars they earn into baht to pay off their debt to banks.
The “TMB Long-Term US$ Loan for SME Exporters” programme will, therefore, help them control these currency-related costs, he said.
In general, a credit-rated business that takes out a dollar-denominated loan has to pay interest of 6 per cent, but SMEs are not assigned ratings by the agencies.
Therefore, small and medium-sized exporters find it difficult to access dollar loans and have to pay higher interest than credit-rated companies.
Piti Tanthakasem, chief wholesale banking officer at TMB Bank, said the joint programme with the IFC was suitable for flood-affected medium-sized businesses that require loans of more than Bt30 million, he said. For enterprises requiring a credit line of no more than Bt30 million, the bank will suggest they enter the Bank of Thailand’s soft-loan scheme, which offers a fixed interest rate of 3 per cent for five years.
Karin Finkelston, IFC vice president for Asia-Pacific, said the programme marked the institution’s first step in playing a role in helping the financing gap for Thai SMEs.
She said that while the IFC planned to expand the scope of its partnership with TMB Bank, it had no plans to be a stakeholder in the bank.
The IFC is interested in providing term-loan programmes through local financial houses, while adding to its staff in Thailand and promoting environmentally sustainable businesses in the Mekong region through partnerships with local banks, she added.
