Regulators must know when to say 'no'

Regulators, particularly the Bank of Thailand (BOT) and the Securities and Exchange Commission (SEC), should be willing to say no to some activities, particularly when the economy is driven by capital-market activities. 

“Financial services are the biggest influence on the livelihood of society. If financial institutions go bust, everybody goes bust,” he told the audience at the SEC’s 20th Anniversary Symposium on “Asia: The Dynamic Capital Market Frontier”.

In his speech, entitled “Moving Ahead in an Open World”, he said the SEC should have the courage to hit the red button and put the brakes on before it’s too late and a situation develops like the one that occurred in 1997. He said that then, the BOT took a wrong step in evaluating the banking crisis, focusing on balance sheets without looking at the deterioration in lending practices. As such, non-performing loans rapidly ballooned, resulting in the financial crisis. 

In capital markets, there are targets to be achieved, Banthoon said.

“All managers are under pressure and they’ll do anything to meet targets, even if that entails more risk. All banks are the same. They take risks and nobody can manage the risks, given the many variables,” he noted.

In good times, all players in the capital market share profits. Yet, it is the regulators who must ensure that all the risks are being taken into account, to prevent negative repercussions. 

Deforestation for farming purpose is one of the greatest risks we face, Banthoon said, as it could ruin the economy in the long term. Referring to deforestation in Nan that was carried out with the support of a food company, he said that the regulators have not done enough to ensure the company takes into account the actual cost. “The tragedy can go on unchecked” as the agencies with jurisdiction, like the ministries of Natural Resources and Agriculture, are not structurally capable of dealing with the problem, the banker said. 

Banthoon touched the hearts of the audience when he asked SEC officials at the symposium if the regulator had the courage to bar companies involved in illegal farming from listing on the stock exchange. 

“This barbaric capital is destroying people…Who really cares? Those who care, they don’t know how to fix this. This is a national-level challenge. The SEC has a capable team and I hope they have the moral courage to do the right thing. I hope that the BOT and SEC will not disappoint me.”

To a question from the floor concerning conflict of interest at the SEC, whose chairman remains a director of listed companies, Banthoon said such a situation should never occur, as rules governing this behaviour are in place. He noted that rules should not be left open to interpretation.

His bluntness won overwhelming support from the audience members, with one vowing to vote for him if he would run for office. Much to the audience’s disappointment, however, Banthoon said, “I have many roles, but being a politician is not one of them.”