Thai banks offering higher deposit interest rates
New DPA Act seen as an inducement to spread investment risk

BANGKOK: -- Small banks like Land and Houses Bank have been offering higher deposit rates to keep customers since the Deposit Protection Agency Act was implemented last week.

Small banks are offering higher returns on short term deposits in a bid to maintain their customer bases as depositors are expected to spread their investments to reduce risk since the Deposit Protection Agency (DPA) Act came into effect.

Bigger banks had been leading the market for attracting deposits.

Now the Act has come into effect, the government's guarantee on all deposits held by commercial banks will gradually be reduced to Bt1 million per person per bank over the next five years.

For a year after the implementation of the Act, the blanket guarantee on deposits will still be effective but will be reduced to Bt100 million, Bt50 million, Bt10 million and Bt1 million over the next four years.

The reduction in the guarantee has prompted speculation that depositors will shift their money to larger banks, seeing them as safer havens for their cash.

Although the DPA came into effect on August 11, all bank deposits are still guaranteed for another 12 months, but banks have already responded to the new law by raising returns to maintain their depositor base.

Som Pisarnsopon, head of the finance and strategy division at ACL Bank, said small and mediumsized banks usually offered higher returns than bigger bank but lately the major banks had led the market by increasing their rates of return.

Small banks have been forced to adjust their deposit rates even though they considered they were already high enough.

"I think deposit rates are already high in the current market situation, but when the big banks raised their rates, smaller ones like us had to follow suit just to stay competฌitive," Som said.

Most banks are offering 3.85 per cent return on bills of exchange (B/Es) on a threemonth fixed term, with a minimum deposit of Bt1 million required.

Thai Credit Retail Bank, another small bank, is offering 3.99 per cent on five month fixed deposits, requiring a deposit of Bt100,000 to Bt10 million. This offer runs until September 8.

Land and House Bank, in the same category but specialising in mortgages, is offering 3.8 per cent on fourmonth fixed deposits until September 15. A minimum deposit of Bt100,000 is required.

Thanachart Bank offers the best return among small banks, but there are strings attached.

The offer is only for cusฌtomers who open a deposit account at one of its new branches within 15 days of its opening.

To open a three month fixed term account Thanachart requires a deposit of Bt100,000 to Bt5 million, which offers an annual 5 per cent rate of return. In addition, customers have to open a savings account with Bt5,000 and apply for an ATM card.

The most recently opened branches are in Chiang Mai and on Asoke Road in Bangkok, which opened on August 8 and August 11 respectively. Another 10 branches are to be opened between August 22 and 29, are on Sukhumwit 47, Pahurat, Bang Buatong, Ladprao 101, Paknam, Pattanakarn Road, Buddhamonton Sai4, Lotus Chaiyaphum branch, Lotus Mahachai branch and Pattaloong Province branch, will be opened between August 22 to 29.

Thanachart is also offering a sixmonth fixed term deposit account giving a return of 3.875 per cent until August 18, the minimum deposit being Bt50,000.

Kiatnakin Bank requires a minimum deposit of Bt2 million to open a five month fixed term account offering a return of 3.875 per cent.

Tisco Bank is offering B/Es carrying a 4percent return, which is paid on a monthly basis. Customers can buy them for fixed terms of four, six, nine or 12 months. A deposit of Bt500,000 to Bt1 million is required.

United Overseas Bank (Thai) offers a 3.8percent return on three, four, five and six month fixed deposits. A minimum deposit Bt100,000 is required and a minฌimum of Bt5,000 for further deposits. Only the five month fixed deposit offers a 4.2 percent rate of return. These promotions are available until August 22.

Large banks such as Bangkok Bank and Siam City Bank offer a 3.8 percent return on five month fixed deposits while Siam Commercial Bank is offering 3.8 per cent on four month fixed deposits. Bank of Ayudhya is offering 3.8 per cent and 4 per cent on five month and 10 months fixed deposits respectively. TMB Bank and Kasikornbank are offering 3.65 per cent on fivemonth fixed deposits.

-- The Nation 2008-08-18

I recently inquired about putting my retirement extension money into one of these higher yielding fixed term accounts at my local KrungThai Bank branch and was told that farangs need not apply.

refused these rates at bangkok bank and siam city only for thais

dont forget the 15% witholding tax on interest ....

Anyone know what the rates are like in Singapore and does the government there guarantee deposits? Even if there was a run on the banks here who imagines farang money would be guaranteed anyway.

They will let you open an account but not pay you interest because you are a farang? Is this for real?

Yes.

Although one month I think that Kasikorn goofed and payed me 0,75% interest........I didn't complain!

I have a farang friend in Chiang Mai who regularly opens fixed rate short term accounts with both the Bangkok Bank and the Thai Military Bank. He also claims back the withholding tax back from the tax man every year.

I have a BKK bank ac. in Chiang Mai and I have always been paid interest

I got 5% term deposit at SCC a couple of years ago.

They are required to see a Work Permit--I have just managed to open the Siam City Bank 3.8 % and, although without WP--they accepted the Retirement Visa, also asked, as an afterthought to see Thai wife's Tabian Bahn. Incidentally, as with BKK Bank this one closed already.

I was informed at my previous job (at a very large electronics company in Thailand, 6000+ employees) that HongKong would be safer than Singapore.

My Thai wife and I have a joint account at Bangkok Bank. I have no work permit and we do get interest.

is 3.85% per year with three months where you can't take back your money or is it 3.85% given every three months?

I've had a Bangkok Bank account for a couple of years, and just recently noticed that I've been getting interest on it.

Last week I went to deposit 200k into that account. The clerk recommended I open a term deposit account, as my savings account was only giving me .75% interest.

She gathered the paperwork, took me up to the new accounts section and an hour later I had my new account (5 month term deposit at 3.8%). (Just a passbook, no extra ATM card or anything, as it is a fixed term account)
This works for me, for now, as I want to start putting my "retirement" amount into the bank soon anyways. My plan is to put the 800k into an account and just leave it there indefinitely.

(Note: I did this with just the 30 day stamp in my passport. The only thing they required was a photocopy of my passport, as I already had an existing account. Still had to fill out the application forms for the new account, but that was fairly painless).

Given that the "official" rate of inflation is 7%, and there is a 15% withholding tax on deposits, what is in fact being touted by the Thai banks is negative interest - around minus 3 to 4% over 12 months.

My wife and I bank with SCB. Every time either of us go into our branch to draw out cash, they beg us to open a deposit for 15 months, @ 4%. "Mai ow, khrap".

We opted for 7% on 12 month fixed term bonds with offshore (Isle of Man) branches of UK banks.
Given the hype or hysteria about the credit squeeze, and UK banks shares, because the Isle of Man has a deposit protection scheme of 75% of the first 20K per investor, we opted for this 'risk' as being lesser than that of Thailand - and, no tax to pay!
At 7%, we just break even on Thai inflation when we move the money here - BUT - swings and roundabouts - we could be stuffed on the exchange rate!

Ah well.......

Hi All.
I was refused last year at Bangkok Bank Khonkaen because I am farang, but I believe you can get it at any Bank if you can produce a yellow tabien ban house book.
phupaman.

UK accounts are now offering almost 7% far more security with the FSA....3.8% here aint that good & it only lasts for a few months then reverts to teh standard rate