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Published on July 21, 2007

Back in 1997 the bank was a finance company called National Finance. It survived the closing of 56 finance companies, but its difficulties remained, and investors lacked confidence in financial companies.

"The company was successful in a capital increase before the crisis hit, thanks to the vision of our executives. The recapitalisation prepared us for the economic slow-down," he said.

Negative signals ahead of the crash included real-estate oversupply, high public debt and increasing distressed loans. Seeing this it decided to go to the market.

Anuwat said National Finance had been among the few to do so before the crisis when market sentiment was still positive. It had another capital increase after the crisis.

In 1997 National Finance's deposits dropped Bt19 billion, or 50 per cent of all deposits. People lost confidence in its stability. Non-performing loans rose to 18 per cent of all loans.

However, recapitalisation spared the company from a liquidity shortage. As a result, National did not need the Financial Institutions Development Fund to bail it out like most others.

The company had enough cash to cope with a run on deposits.

After the crisis, the company also had to reduce its asset base and balance loans and liabilities. Most importantly, more prudent credit standards were applied.

Thereafter National integrated with subsidiary Ekachart Finance and Securities.

"Although the worst had past, business remained quiet. The economy was still in bad shape. There were hardly any loan applications from wholesale customers. We decided to turn our focus to retail banking.

"The company was among the first to develop car loans after the crisis," Anuwat added.

He said flat rates for vehicle hire-purchase loans had been unique during the high-rate environment in the wake of the 1997 crisis.

The bank's product met with a good response. The fixed-rate product was well matched to the demands of lenders and borrowers who wished to manage fixed incomes and expenses respectively.

With success in consumer financing, National applied for a banking licence after its merger was complete.

National has been operating as Thanachart for five years.

The bank is among the top three hire-purchase lenders, with 30-per-cent market share.

Somruedi Banchongduang

The Nation