Narrowed focus for bank mergers
THE Secondary Mortgage Corporation (SMC) and the Government Housing Bank (GHB) will be merged under a plan to cut costs and boost efficiencies, but it has emerged that no other state-run lenders are in the frame to be combined.
While Finance Minister Apisak Tantivorawong said that a draft law would facilitate the merger of some specialised financial institutions, a source within the Finance Ministry said the proposed legislation was intended only for SMC and GHB.
The anonymous source from the Fiscal Policy Office (FPO) said that the draft law had no other targets beyond SMC and GHB and that officials had been mindful that employees of other state-run banks would be concerned for their jobs.
After a public hearing for the draft law, the plan could be disclosed, said the source, adding that the FPO and the policymakers have been discussing for some time a merger between SMC and GHB, as the lenders run relatively similar businesses.
SMC supports the secondary mortgage market with financial support from the state, while self-reliant GHB extends and manages mortgages.
“The merger plan will likely proceed with speed, but the draft law must come into force first. Each agency has been established by law. If they are merged, a new law must be launched,” the source said.
The Finance Ministry would oversee the merger.
Based on the merger plan, each company’s permanent employees would not be affected in terms of salaries, welfare and positions, while the jobs of temporary employees would be terminated, with compensation as stated in the law.
The FPO has drafted the law for a state-run bank merger that could lead to better management of liability-asset maturity mismatch; a public hearing on the legislation has been launched.
The Bank of Thailand has also permitted commercial banks to perform transactions similar to those of a state-run bank whose business is transferred. This means there will be state-run banks, as necessary, but they will not compete with the private sector, nor would they become a financial burden to the budget at any time in the future.
At the end of last year, SMC had total assets of Bt18.97 billion. Its capital adequacy ratio was 11.42 per cent.
GHB had total assets of Bt1.16 trillion at that time. Outstanding loans were Bt1.116 trillion. Total deposits were Bt943.38 billion. Its non-performing loans amounted to 46.495 billion, or 4.17 per cent of the total outstanding loans. Its capital adequacy ratio was 14.19 per cent, higher than the minimum 8.5 per cent as required by the central bank.
