KTB aims to give struggling clients boost to help economy

KRUNGTHAI Bank has vowed to act as a leader in empowering its debt restructuring and assets management to help troubled clients in all sectors in the hope that this will help return the country’s economic activities to normal.
The bank is offering help to customer weakened by the economic slowdown in a bid to prevent non-performing loans (NPLs), according to Parinya Patanaphakdee, senior executive vice president and head of KTB’s credit-restructuring and asset-management group.
The programme is for both retail customers and business customers. If it is obvious the customers are struggling to endure the economic slowdown, the bank will offer measures to ease their concern over their debt repayments.
Many businesses have witnessed a downturn and the global economic downturn has hit the export sector, which is a key engine of the Kingdom’s gross domestic product.
Five years ago, Saha Farms, a major chicken exporter, faced a liquidity crunch as a result of rising animal-feed costs, labour costs and appreciation of the baht.
In October last year, Sahaviriya Steel Industries announced the liquidation of its operations Britain and proposed a debt-rehabilitation plan to Thailand’s Central Bankruptcy Court because of a massive loan default.
This year, many rice millers have suffered losses due to the falling price of Hom Mali rice, while hotel operators are facing low occupancy rates due to the government’s crackdown on zero-dollar tours, which has seen a drop-off in Chinese arrivals.
For KTB customers with more debt than equity and whose businesses are facing a liquidity crunch, the bank advises them to release assets to the bank or covert assets into equity in order to make debt the equal of cash flow.
Saha Farms adopted this solution after entering restructuring and rehabilitation. KTB is a major creditor in the restructuring and rehabilitation of Saha Farms.
The chicken exporter now has enough cash flow to run the business and it has continually bought back its assets back, Parinya said.
SSI’s operation in Thailand remains in good shape and the bank believes the spate of infrastructure projects in the country and the recovery of steel prices will lead the steelmaker out of this difficult period. KTB will monitor cash flows and the performance of SSI from its operating deposit account before considering whether to extend a loan once the firm proves that it is able to run the business as usual.
KTB currently carries NPLs worth Bt98.42 billion, representing 4.24 per cent of its total loans, with an increase in bad loans this year as the result of business clients defaulting, especially small and medium-sized enterprises. The bank is helping SMEs by giving them additional loans or easing repayment conditions so they have more cash flow to run businesses. 
The government wants to see new start-ups created in Thailand as it wants such businesses to be a driver of economic activities, but this takes a long time. As a short-term measure, the bank is helping SMEs pick up economic activities, Parinya said.
“KTB must respond to the government by using our functions and if customers can recover and require lending for new investments, the bank is ready to support them,” he added.
The bank’s board of directors has stressed that the management team must focus on how to help the economy and not be obsessed with making profits, he said.
KTB aims to lower NPLs to a similar level as its rivals in the next three years.
Along with debt restructuring, the bank will sell some legacy NPLs to asset-management companies, a first for the bank.
“Those are legacy NPLs that have stayed in the bank for a decade and some of those clients have wound up their businesses. We will sell Bt800 million worth of NPLs this year from total legacy NPLs worth Bt20 billion,” he said.