Krungthai bank, SCB seek BOT nod for larger loans to conglomerates
Krungthai Bank and Siam Commercial Bank, the second and the third largest, recently asked the Bank of Thailand to relax their single lending limit, while Bangkok Bank and Kasikornbank have no need to follow in their footsteps because they want to control
The central bank will now allow commercial banks to lend more than 25 per cent of their risk capital to companies in a single group on a case-by-case basis.
Krungthai Bank wants to facilitate a loan to a conglomerate. It might also ask for a higher limit for another conglomerate in the near future, Kittiya Todhanakasem, first senior executive vice president, said last week.
The single lending limit could hit the bank’s capital, so it must seek alternative funding solutions for customers in order to avoid the reduction of capital, she said.
KTB has a BIS ratio of 15.3, of which the Tier 1 ratio is 11 per cent.
The BIS ratio might fall slightly but the bank believes in its risk management ability. The bank must ensure that the credit extended to a single client yields a high return to trade off with the capital that is being affected, she added.
In Siam Commercial Bank’s case, the central bank approved the lifting of the single lending limit for CP Group from 25 per cent to 60 per cent to accommodate CP All’s acquisition of Siam Makro.
President Kannikar Chalitaporn said SCB’s Tier 1 capital is 11.5 per cent of risk weighted assets, higher than the 6-per-cent Basel III requirement. The loan to a single client did not affect the bank’s capital base.
No larger customer is near hitting the bank’s single lending limit yet, she said.
Bangkok Bank, whose credit portfolio is mostly corporate loans, has no plan to ask for an easing to expand lending to single clients, said Chansak Fuangfu, senior executive vice president.
No single exposure is close to the ceiling yet and the bank will attempt to control lending so that it does not exceed the bank’s limit.
However, BBL has studied extending the lending limit because the businesses of customers have to grow and they will require more liquidity.
Predee Daochai, president of Kasikornbank, said the bank has no plan to extend the lending limit to a single borrower because it doesn’t want to take the risk of overconcentration.
It can address a corporate customer’s financial requirements by stitching together a syndicated loan or helping it mobilise funding from the capital market.
Philip Tan, president of Bank of Ayudhya, said the bank’s capital is enough to accommodate a single corporate customer. However, the government’s Bt2 trillion infrastructure plan will force business groups to seek more financing to take on the mega projects and the lending limit might need to be loosened up.
While the bank can serve corporate customers this year, next year it might consider increasing capital, but this issue will have to wait for the decision of the new major shareholder.
General Electric, the current major shareholder, is trying to unload its entire 25-per-cent stake in the country’s fifth-largest bank.
