BoT nears QAB deal with Malaysians

Veerathai: SMEs starting to hedge

The Bank of Thailand expects to reach a conclusion with Bank Negara Malaysia on long-awaited Qualified Asean Banking (QAB) criteria soon, paving the way for indigenous banks in one country to operate in the other and receive similar treatment as local banks.

The central bank is also in the process of negotiating with the Indonesia Financial Services Authority and the Central Bank of Myanmar on the establishment of QABs with those countries, said Bank of Thailand governor Veerathai Santiprabhob.

"We are negotiating with the three central banks, but the agreement with Malaysia should soon be finalised," he said.

The Bank of Thailand signed its first Heads of Agreement on a reciprocal bilateral arrangement regarding QAB with Bank Negara Malaysia on March 14, 2016.

The bilateral arrangement is part of an umbrella agreement for the 10-member bloc called the Asean Banking Integration Framework, which provides greater access for indigenous Asean banks to other members' banking sectors, as well as operational flexibility on a reciprocal basis.

Two Malaysian financial institutions have banking operations in Thailand: CIMB Group, Malaysia's second-largest financial services provider by assets, which operates through its 93.7%-owned subsidiary CIMB Thai Bank (CIMBT); and RHB Bank, Malaysia's fourth-largest bank by assets, which has a branch here.

Bangkok Bank has incorporated wholly owned subsidiary Bangkok Bank Berhad to operate in Malaysia.

Mr Veerathai said Asean central banks have a shared goal of promoting financial integration among the bloc.

"We see integration in terms of investment and trade between Thai companies and neighbouring countries continuing to strengthen," he said. "Thai financial institutions also have expanded their operations into neighbouring countries."

Separately, Mr Veerathai said more local small and medium-sized enterprises (SMEs) are participating in a programme to improve their competitiveness by giving them access to foreign exchange hedging tools with lower fees.

"More SMEs that import and export are taking part in the programme," he said. "Even though the number of SMEs enrolled is still rather small, we expect it to rise as financial institutions hold seminars to educate them."

The programme is a collaboration with the Thai Bankers' Association.

Mr Veerathai said the central bank is considering changing the criteria for Debt Clinic participants, amending the law to allow non-bank financial institutions to take part with a goal of adding more debtors to the scheme.

The clinic attempts to help income earners who failed to repay credit, cash card or personal loans for at least two banks for more than three months before May 1. The participants' principal plus unpaid interest must not exceed 2 million baht per borrower.

Mr Veerathai expects several non-banks that the central bank talked with to join the scheme.


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