KBank pushes more baht-ringgit deals
KASIKORNBANK (KBank) is strongly promoting the using of baht-ringgit for payment to Thai businesses who have trading exposure in Malaysia after the bank was designated one of the clearing agents for baht-ringgit payments.
Bangkok Bank, Kasikornbank and CIMB Thai bank will be the clearing agents in Thailand, while CIMB and Maybank will be the clearing agents in Malaysia.
KBank will join hands with Maybank in sharing advisory services, customer referrals to boost business activities in cross-border trade and investment because KBank does not have branches in Malaysia, while Maybank does not have branches in Thailand, Worawut Wesaratchakit, head of World Business at KBank, said.
Customers have witnessed high volatility in using US dollar-ringgit, hiking the currency cost. Bilateral currencies are expected to help reduce costs for companies who have trading business in both countries.
Malaysia is the fifth-largest trader with Thailand with a trade volume valued at Bt800 billion, of which around 95 per cent of payments are in US dollars.
Bilateral currencies would play a greater role in Asean with the implementation of the Asean Economic Community, he said.
The bank is giving information on the role of the two currencies and products that could help them do business smoothly, such as foreign currency deposits, hedging products and trade finance.
The market share of KBank in baht-ringgit transaction is less than 1 per cent but after chosen as a clearing agent, but the bank hopes its market share will increase to 2-3 per cent within one year, he said.
However, it will take more time to increase the use of the ringgit, as the currency has to further develop to become a crucial currency in Asean trading. Even China’s yuan had to spend a decade to become one of the world’s 10 most-used currencies for payments.
In global trade, 30 per cent of transactions use China’s yuan for trade settlement, he said, and added that about 15 per cent of Thailand’s trading is done in yuan.
Bangkok Bank and its wholly owned subsidiary, Bangkok Bank Bhd, has started to quote baht-ringgit to customers. The bank hopes that the volume of ringgit transactions will gradually increase after the move by the two countries to set up clearing agents.
