Privatisation plan for state banks sent to Kittiratt
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The Fiscal Policy Office has submitted its privatisation plan for state-run banks to the finance minister, the objective behind the proposals being to reduce the state's burden in raising capital.
The plan includes the establishment of a regulatory board to ensure clarity in each bank’s operational direction, particularly in regard to state institutions not competing with private banks.
Somchai Sujjapongse, director-general of the FPO, yesterday said he had forwarded the privatisation plan to Finance Minister Kittiratt Na-Ranong.
The finance minister would head the regulatory board, which would comprise representatives from related agencies, as well as state-bank representatives serving as directors.
The proposed establishment of the regulatory board is aimed at reducing potential conflicting opinions on regulatory issues between the FPO and the State Enterprise Policy Office.
The plan is for a specific central regulatory board for state banks to supervise the institutions, while an initial regulatory board would set the overall direction of business operations for all the state banks.
The FPO would serve as the secretariat of the regulatory board, as well as being a board member, Somchai said.
Under the privatisation plan, the course of operations for state banks will be clearer, he said.
The business operations of state banks must not compete with those of private banks, besides which they would be required to focus on small client groups, or on client groups that private-sector banks have chosen not to concentrate on.
Furthermore, state banks would be subject to less strict Bank of Thailand regulations, as their business operations would be in accordance mainly with state policies, he added.
“Since state banks’ clients are higher-risk groups, less strict regulations would apply compared to those of private banks. The classification of borrowers/debts must also be appropriate to the particular state bank at each location.
However, the assets-to-risk ratio requirement would remain unchanged – the same for both state and private banks,” said the FPO chief.
Under the privatisation plan, it would be necessary to revise certain state-banking laws to allow broader business activities.
In the future, there would be a need to propose laws to regulate all banks in a uniform manner, since today some state banks comply with a specific set of regulations, which makes it difficult for the Finance Ministry to achieve consistency, Somchai added.
“The objective of the privatisation plan is to allow state banks to proceed with their business activities without depending on sources of funding from the state, as in the past, as this requires huge capital injections, he added.
