SME Bank to put its loans on the market

SME Bank's NPLs are not clean loans, but they have collateral such as machinery and land, he said. This will make NPLs attractive, and the bank will sell to those who offer the highest price, he said.

NPLs are currently estimated at Bt19 billion or 43 per cent of outstanding loans. Part of the bad loans will be restructured by SME Bank. He said he would allocate more staff to deal with the NPL issue. The bank plans to reduce NPLs to 26 per cent of outstanding loans in the next three months.

With the economic slowdown, re-entry and new NPLs come to between Bt400 million and Bt600 million each month, he said.

The bank will also ask the Finance Ministry to allow it to mobilise funds via saving accounts to reduce funding costs. If Finance Minister Chalongphob Sussangkarn agrees, he will seek further approval from the Cabinet, according to Somchai.

Funding costs are high because SME Bank has to borrow from other financial institutions, including international development banks, and then relend to SMEs, resulting in high inter-rate charges. If the bank can get direct deposits from people it can charge a lower rate when it lends, according to Somchai.

Somchai said he would shake up the management at SME Bank by requiring 40 managers to sign employment contracts every year. If senior managers cannot meet performance benchmarks, the bank will not extend their contracts, he warned.

The Finance Ministry has completed 17 out of 24 cases that it suspects involve fraudulent lending. Corrupt lending has also contributed to the high rate of NPLs at SME bank.

Wichit Chaitrong

The Nation