Thai Banks Seek Aid to Boost Lending

Thailand’s banks are seeking a 54 billion baht ($1.54 billion) state aid package designed to help them restart lending to businesses and lift the economy out of a probable recession.

The Thai Bankers’ Association asked the government to provide 50 billion baht for loans to exporters and 4 billion baht to recapitalize the state-run Small Business Credit Guarantee Corp., Secretary-General Twatchai Yongkittikul said in a phone interview from Bangkok today.

“Given the current economic situation, banks are quite careful in extending more loans, particularly to small businesses,” said Twatchai, whose association represents lenders including Bangkok Bank Pcl, Siam Commercial Bank Pcl and Kasikornbank Pcl. “In order to help banks become more confident, this credit guarantee scheme would be very helpful.”

Loan guarantees for exporters and small businesses are “absolutely essential,” Prime Minister Abhisit Vejjajiva said on Jan. 31.

Southeast Asia’s second-largest economy may grow no more than 2 percent this year as exports and investment decline, according to government forecasts. Exports, which make up 70 percent of gross domestic product, may shrink as much as 8.5 percent this year, the first drop since 2001, according to the Thai central bank.