Bt15m credit lines the focus of SME Bank's rehabilitation scheme
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THE SMALL and Medium Enterprise Development Bank of Thailand will step up on providing credit lines of up to Bt15 million to small businesses as well as selling bad loans as part of the state bank's urgent scheme to rehabilitate its financial performance.
Chairwoman Salinee Wangtal said yesterday that the focus on credit lines of no more than Bt15 million per small or medium-sized enterprise was the first step – together with conducting due diligence on its assets and liabilities – of its plan to be submitted to the State Enterprises Policy Commission, or “superboard”, next month.
Small credit lines are a measure that could help prevent the concealed process and tackle non-performing loans, as the sickest loans at SME Bank were found in larger credit lines to larger businesses rather than to small one, she said.
Last month, SME Bank carried Bt33.85 billion of NPLs, representing 39 per cent of the total, an improvement from Bt34.91 billion or 40 per cent in June, after helping customers restructure their NPLs through small credit lines.
The bank last month launched nine lending programmes under the Bt15-million measure.
From September 9 through this Monday, it received 4,569 applications for Bt7.7 billion of credit, of which 3,330 totalling Bt3.175 billion have been approved.
The State Enterprise Policy Office has given the bank a target of 80 per cent for credit lines to small businesses of not more than Bt15 million and 20 per cent for above Bt15 million, compared with 66:34 currently. The bank aims to reach the target by the end of next year.
NPLs will be classified into three categories, under the second phase of the rehabilitation plan.
The first is NPLs from SMEs |that failed with collateral. The Bt20 billion in distressed assets from |this segment will be divided into units for bidding by asset-management companies. Bad assets with no collateral that have already been provisioned for will be assigned to private debt collectors via tendering. The auctions will be held this year.
Second is NPLs in the public-service account. The bank will ask for compensation from the Finance Ministry.
Third is NPLs of SMEs that require debt restructuring. They will be helped by the bank through credit lines of up to Bt15 million. SME Bank returned to the black last quarter, logging a net profit of Bt157 million versus a net loss of Bt41 million in the first six months, by helping special-mention loans to become performing loans under the Bt15-million scheme.
Liquidity management is the fourth focus of the rehabilitation plan.
The bank is trying to stretch time deposits to match loan terms. Most of its funds are short-term deposits.
The last priority is human-resource management. Back-office staff are being migrated to the front office.
A loan-monitoring team has been formed to tackle the NPLs expected from the loan-expansion plan.
The Finance Ministry is to inject Bt2 billion from the current fiscal budget into SME Bank when it finishes its due diligence, but the capital will be kept for expanding lending instead of resolving the financial troubles at the bank, Salinee said.
