KKP first to offer Lombard loans
KIATNAKIN Bank (KKP) has become the first in Thailand to offer Lombard multipurpose loans to strengthen the group's wealth-management business and prepare for serving the middle-income market in the future.
“We will provide Lombard loans to high-net-worth customers with assets under management of Bt30 million at Phatra Securities.
“The borrowers must hold cash, securities, property funds or infrastructure funds as collateral,” Aphinant Klewpatinond, president of KKP, the banking business of Kiatnakin Phatra Financial Group, said yesterday.
A Lombard loan is a flexible financial solution used in global private banking for wealthy customers who require additional capital for investment but do not have to sell their existing securities portfolio.
KKP says it brings expertise in private banking and wealth management. The latter is under Phatra Securities, the securities arm of the group.
Securities houses cannot do this type of lending, so the bank, which is planning to expand to personal loans in the near future, has brought out this kind of product for customers of Phatra Securities who want to borrow to increase the value and returns of their investment portfolio.
As long as the country needs to fuel economic growth, the household-debt level cannot go lower than it is at present, Aphinant said.
The high level might be a barrier to loan growth, so the next direction of KKP is towards low-risk customers such as corporations and the non-lending business by leveraging products with Phatra Securities.
In the future, KKP might allow mutual funds and life-insurance policies to serve as collateral for Lombard loans.
Phatra Securities has 2,000 high-net-worth customers with total assets under management of Bt300 billion.
The maximum credit line granted per customer is Bt500 million. Since the launch of Lombard loans early last month, the bank has approved Bt3 billion in credit for customers. The Lombard-loan portfolio is estimated to reach Bt20 billion in two years.
Financial consultants from Phatra Securities will market the product to wealthy customers interested in this financial solution, while the bank will be in charge of loan approval.
The interest rate for Lombard loans is set at 4-5 per cent based on the bank’s cost of funds. KKP doesn’t have personal-loan products for general customers, but as a bank, it should have a complete product line-up to fulfil all customer segments, Aphinant said.
Salaried people with monthly incomes of Bt80,000 and small businesses are the focus of the bank.
“The upper-income segment was not affected by the economic slowdown. We can see them purchasing upscale condominiums and luxury vehicles, so the direction of KKP should go to this segment.
“People with a monthly income of Bt15,000 will not be the focus for us if we have personal-loan products in the future,” he said.
