Policy rate not the only factor in banks' decisions to cut interest rates, BBL says

Kosit Panpiamras, executive chairman of the country’s largest bank, said yesterday that financial volatility had increased after many countries undertook the unconventional monetary policy called quantitative easing (QE), which has influenced massive fund flows. 

The United States began the QE trend and now Japan is following suit, and Tokyo’s move is expected to have an impact on the Asian markets as Washington’s did. 

To help ease the massive flow of foreign funds and keep Thailand’s economic growth on track, the central bank decided to cut its policy interest rate. 

For commercial banks, the decision to cut their interest rates is not based only on the policy rate, but the market forces are also a key factor.

Even though Bangkok Bank is the largest, it cannot resist these market forces, while the demand for loans is another element to consider.

“We are watching the reaction [to the BOT’s move in terms] of interest-rate cuts based on the market situation and global market volatility. As long as the competition in the banking industry is serious, cutting rates is likely to be difficult. But if the degree of competition is easing, the interest rates will respond to the market situation,” Kosit said.

 

Family Banking 

Two weeks ago Chartsiri Sophonpanich, president of Bangkok Bank, said it was considering a rate cut, and that consideration might take a day or two.

Meanwhile, Bangkok Bank is building a tight collaboration with four affiliates – Bangkok Insurance, Bangkok Life Assurance, BBL Asset Management and Bualuang Securities – to reinforce retail banking.

Bangkok Bank has smallest retail-loan portfolio among the four major banks, and this “Family Banking” collaboration is part of its attempt to improve its retail-banking efficiency, Kosit said.

The financial challenges in the Thai market have changed because people are living longer and there are rising risks from economic and social conditions. Bangkok Bank and its four affiliates should have greater roles in helping educate families nationwide to ensure their financial security.

The birth rate in Thailand over the past 20 years has slowed, which means the country has more ageing people. According to the country’s census, male life expectancy is 70 years on average, and 77 for women. 

 “Given the change in the life cycle, the duty of the bank is to encourage people to be aware and to secure their financial situation. When families agree with this financial challenge, they will be stronger, and the country will be also,” he said.

“Bangkok Bank Family Banking” events will be held in main cities that have large investment and trade flows, starting in Chiang Mai, Udon Thani and Bangkok.