September 17, 2008
BANGKOK (AFP) - Thai banks are unlikely to be affected by the US financial crisis that has battered markets around the globe, the governor of the Bank of Thailand said Wednesday.
Tarisa Watanagase said holdings tied to failed Wall Street investment bank Lehman Brothers represented only 0.0009 percent of 7 trillion baht (204 billion dollars) in loans from Thailand's 14 commercial banks.
"There is little worry about a domino effect. Lehman Brothers is a very big bank, ranked the fourth in the US. Thai commercial banks usually invest in the big banks. So they are less likely to invest in small investment banks (which might collapse)," Tarisa said.
The US Federal Reserve's unprecedented loan of up to 85 billion dollars to avert the collapse of American International Group (AIG) also meant the troubled insurance giant's affiliated companies in Thailand would not feel much of a pinch, she added.
Seventy percent of cash flow at commercial banks in Thailand is from local deposits, according to the Bank of Thailand, meaning they are less exposed than banks in other countries to the global credit crunch.
Tarisa said she expected Thai stocks to improve on recent losses.
"The Thai stock market has declined as it moved in line with other regional markets as (foreign) investors have sold shares to get cash back to use in the US."
Lehman Brothers said it would file for bankruptcy on Monday after a frantic weekend of negotiations failed to arrange a rescue, and AIG appeared to be in a death spiral before the US Fed announced its bailout Tuesday.
