Krirk-kiat's version of the BBC collapse
'Truth - BBC' is the first and last book by Krirk-kiat Jalichandra, who died last October and left behind documentation of a number of court cases concerning his days as president of the now-defunct Bangkok Bank of Commerce (BBC).
The book has stirred the attention of people in financial circles. Why not? Krikkiat was as-sumed to be the person who knew most about BBC, which was riddled with unscrupulous lending activities and brought to its knees even before the 1997 financial crisis.
In the 191-page book distributed at his cremation service, Krirk-kiat started by telling readers that he decided to write down his memories after the diagnosis three years ago that his lung cancer was in the last stage. He got the urge to share his experiences from the very first day he got involved with BBC.
In 1986, Krirk-kiat, then head of the financial analysis unit of the Bank of Thailand, was dispatched to be assistant managing director of BBC. He was promoted to president on September 1, 1988, and held the post until June 6, 1996. In the book is his thinking on what really destroyed BBC, which folded in 1996, its 52nd anniversary.
He was convinced that BBC would still exist today were it not for the no-confidence debate in 1996. On May 9 of that year, MP Suthep Thaugsuban of the Democrat Party raised the financial problems at BBC. He exposed data that the bank’s non-performing loans (NPLs) were as high as Bt24.65 billion, as a result of lending to Cabinet members of the Banharn Silpa-archa government.
“Only one day after the censure debate, our customers who deposited money at BBC rushed to withdraw Bt30 billion from the bank. No bank that faced the event BBC did could have survived, regardless of its healthy financial results,” he wrote.
Krirk-kiat explained in his book that before the censure debate, BBC’s management had tried to solve its NPL problem by working closely with the central bank. Business-restructuring options were discussed from 1986 until the last minutes of May 17, 1996, when finance minister Surakiat Sathirathai ordered the establishment of a committee to take control of BBC.
“Since I started running BBC, I tried to offer plans to restructure its debts worth Bt8.86 billion in 1986. I asked the Bank of Thailand to provide a soft loan worth Bt300 million to support the restructuring plan, but the central bank refused.”
So he tried to handle the problem by himself. This included a plan to start an investment banking business. In his opinion, that business was in line with the BOT’s policy to liberalise the financial market in 1992. This marked the start of BBC’s entry to a pool of risks, stemming from heavy takeover loans extended between 1992 and 1996.
At that time, Krirk-kiat wrote, he knew Rakesh Saxena, an Indian newspaper and financial-magazine columnist. He had the impression that Saxena had the best knowledge about the financial sector, and like Krirk-kiat, Saxena believed that investment banking was the future of all banks. Krirk-kiat discussed the new business strategy with Saxena. His trust rose after the Indian provided good tips for BBC to avoid a hostile takeover in 1992.
“Rakesh helped buy BBC shares to fight with speculators,” he said, though admitting that part of the money was borrowed from BBC.
After that, Saxena was made Krirk-kiat’s adviser, mainly on the investment banking business and takeover deals.
“I accepted that I trusted Rakesh to help me run the bank, even though I really did not know what he was doing,” he wrote.
After the run on deposits, Krirk-kiat tried to solve the problem without any help from the finance minister or the BOT. Instead of helping him, the authorities hired the Industrial Finance Corporation of Thailand (IFCT) to run the bank.
He said that because of the IFCT, BBC swung from Bt860 million net profit in 1995 to a net loss of Bt24.85 billion in 1996.
While spending the next 16 years defending himself in the courts, he remained convinced that if the BOT had been serious about revamping BBC in 1986 and the bank had not been implicated during the censure debate, it would not have faced its poor destiny and the country’s financial system would not have collapsed in 1997.
“There have been many versions on the truth about BBC, but my version is real,” he wrote. “This is the reason I decided to face the court rather than flee overseas like other financiers who faced the same charges. It’s the truth that I did not embezzle money from the bank as charged by the Bank of Thailand.”
