Deposit insurance money to pay off 1997 crisis debt

Deposit insurance contributions to fall from 28 billion to 700 million baht per year to pay off FIDF 1997 crisis debt. Deposit protection falling from 50 to 1 million baht by August.

Before the global economic crisis of 2008-2009 changes had already been made to Thailand's banking laws for a gradual reduction of deposit insurance for Thai bank accounts. This was expected to cause a flow of funds out of bank deposits to investments with higher return (Read article). After the global crisis began in 2008, countries around the world began to increase deposit insurance coverage (See Wikipedia). Thailand postponed its planned reduction of deposit insurance to this August, as today's article mentions at the end.

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Economics

Deposits safe, protection sufficient

DPA insists it will be able to back accounts
Wichit Chantanusornsiri

Thailand's Deposit Protection Agency (DPA) reassured depositors that their funds are safe, even though the amount of money collected to protect their accounts will soon fall dramatically.

A recent executive decree calls for the Bank of Thailand to utilise deposit protection levies to pay the 1.14-trillion-baht debt of the Financial Institutions Development Fund (FIDF). 

On Monday, the Thai Bankers Association (TBA) agreed to raise the tax on deposits to 0.47% from the current 0.40%. Of the 0.47%, only 0.01% will go to the DPA, while the rest, 0.46%, will go to FIDF for debt repayment.

The steep reduction in deposit protection contributions has raised concerns that depositors will be at risk. Naris Chaiyasoot, chairman of the DPA, rejected the speculation.

"I would assure the depositors that we are a state agency, managed by state officials. The government would be ready to lend support. No need to worry," said Dr Naris.

Singha Nikornphan, a director of the DPA, said the agency has total funds of nearly 100 billion baht from earlier collections of around 28 billion baht a year. Once the new decree is announced in the Royal Gazette, deposit protection proceeds will fall to about 700 million baht a year, but that is still sufficient as the banking sector is strong.

"Since the 1997 financial crisis, Thai banks have learned hard lessons, as have depositors, business operators and regulators. And the economy is still growing well. There is nothing to worry about," Mr Singha said.

Total banking reserves are above required levels, said Mr Singha. Also, the new Bank of Thailand Act allows the central bank to take control of any bank that shows signs of being bankrupt, hence, the damage can be controlled early. Mr Singha agreed with the government's suggestion that deposit protection should be flexible and revisable to ensure efficient risk management.

The DPA protects 50 million baht in each account. That will fall to 1 million baht per account by August.

He said a high level of protection encourages depositors to choose banks by rates rather than by their stability. That might lead to the weakening of banks as they offer attractive rates to gain deposits.

(Source: Bangkok Post, Economics, Deposits safe, protection sufficient, DPA insists it will be able to back accounts, 16/02/2012, Wichit Chantanusornsiri, link) 

Banking Vocabulary

accounts - bank accounts
bank account - banks allow money to be deposited and withdrawn by the holder of a bank account: "These transactions are recorded on the bank's books, and the resulting balance is recorded as a liability for the bank, and represent the amount owed by the bank to the customer. Some banks charge a fee for this service, while others may pay the customer interest on the funds deposited" also called a "deposit account" (See Wikipedia)

deposit - bank deposit, the money in a bank deposit
deposits  - the total amount of money in bank accounts (that has been paid into and is being kept in the bank accounts of one bank, or by one person, or in one country, etc)
depositors - people who keep their money at a bank (in bank deposits) in exchange for interest payments
sufficient - enough พอเพียง

Deposits safe, protection sufficient

deposit insurance - protection for the money that people or companies keep in bank accounts, if there is a problem with the bank or the whole banking system (bank run) the government will pay the depositor the insured amount (insurance coverage) (See Wikipedia and from The Economist)

Deposit Protection Agency (DPA) - the government agency in Thailand that provides deposit insurance to bank accounts

The DPA protects 50 million baht in each account.

insist - say firmly and strongly that something is true
back - support, provide help when needed 
back accounts - back bank accounts, support and help banks by providing the bank with money to pay people with bank accounts, if necessary (for example, helping the bank during a "bank run")
bank run - run on the bank, a time when too many people want to take their money out of a bank at the same time, so the bank cannot pay them all, at this time the government intervenes and deposit insurance would guarantee that at least part of bank deposits are paid back (See Wikipedia)

That will fall to 1 million baht per account by August. DPA insists it will be able to back accounts

banking reserves - "banks' holdings of deposits in accounts with their central bank ... plus currency that is physically held in the bank's vault  ...The central banks of some nations set minimum reserve requirements. Even when no requirements are set, banks commonly wish to hold some reserves, called desired reserves, against unexpected events such as bank runs" (See Wikipedia and also on fractional reserve banking)

Total banking reserves are above required levels.

central bank - the main and largest bank in a country that controls the supply of money, credit and loans in an economy (monetary policy) and provides financial services to the government and other banks (See Wikipedia)
bankrupt - when a business fails and the assets are sold off by a court (liquidation) (See Wikipedia) 

The new Bank of Thailand Act allows the central bank to take control of any bank that shows signs of being bankrupt, hence, the damage can be controlled early.

reassure - tell people that there is no probleem (to increased their confidence , makes them believe in something more and not worry)
funds - money available to spend on something เงินทุน
dramatically - in a big way อย่างใหญ่หลวง
fall dramatically - decrease by a large amount

Thailand's Deposit Protection Agency (DPA) reassured depositors that their funds are safe, even though the amount of money collected to protect their accounts will soon fall dramatically.

executive - the highest level managers in a company
decree - an official order or decision made by the ruler of a country
executive decree - an official order made by the Prime Minister (without the participation of parliament which would normally be required)

utilise - use
levy - tax

deposit protection - the protection that government deposit insurance provides to the money that people keep in deposit insurance
deposit protection levies - the tax on bank accounts that pays for deposit insurance and "deposit protection"
utilise deposit protection levies - use the taxes for deposit insurance

Financial Institutions Development Fund (FIDF) - the organization under the central bank in charge of the remaining massive 1997 crisis debt

debt - an amount of money that you owe หนี้
the 1.14-trillion-baht debt of the Financial Institutions Development Fund (FIDF)

A recent executive decree calls for the Bank of Thailand to utilise deposit protection levies to pay the 1.14-trillion-baht debt of the Financial Institutions Development Fund (FIDF). 

current - at the present time ปัจจุบัน
debt repayment - paying back the money borrowed from a lender (as promised)

On Monday, the Thai Bankers Association (TBA) agreed to raise the tax on deposits to 0.47% from the current 0.40%. Of the 0.47%, only 0.01% will go to the DPA, while the rest, 0.46%, will go to FIDF for debt repayment.

contributions - the amount given by each member to the shared fund
deposit protection contributions

steep - rising quickly and difficult to climb ที่สูงชัน และปีนขึ้นยาก
steep reduction - very large decrease
steep reduction in deposit protection contributions

concerns - worries; things that people are worried about ความกังวล
raised concerns - pointed out problems (that might good reasons to worry)

risk - danger, how likely or possible it is for a bad event that causes harm and damage ความเสี่ยง
at risk - in a dangerous situation
raised concerns that depositors will be at risk

speculation - ideas or discussion about what might happen or why something has happened without having complete information การคาดการณ์ การคาดเดา, การคาดการณ์และประเมิณสถานการณ์
reject speculation - say that what people think might have happened, did not happen

The steep reduction in deposit protection contributions has raised concerns that depositors will be at risk. Naris Chaiyasoot, chairman of the DPA, rejected the speculation.

assure - make confident; to tell something that something is true or will definitely happen ให้ความมั่นใจ, ยืนยัน
assure the depositors  - make the despositors confident (so that they do not worry about possible problems)

support - help, by giving money, for example สนับสนุน
lend support - give support, give help

"I would assure the depositors that we are a state agency, managed by state officials. The government would be ready to lend support. No need to worry," said Dr Naris.

sector - a part of the economy ภาคเศรษฐกิจของประเทศ (public sector = government, private sector = all businesses, household sector = families and consumers, banking sector,...) (See Wikipedia)
banking sector - all the banks in the economy of a country

Singha Nikornphan, a director of the DPA, said the agency has total funds of nearly 100 billion baht from earlier collections of around 28 billion baht a year. Once the new decree is announced in the Royal Gazette, deposit protection proceeds will fall to about 700 million baht a year, but that is still sufficient as the banking sector is strong.

crisis - an urgent, difficult or dangerous situation วิกฤตการณ์ วิกฤต
1997 financial crisis

business operators - businesses doing a certain kind of business
regulators - the government agencies that make rules and laws and regulations for different industries (food, drugs, banking, transportation, commerce) and then check to see if they are being followed

Since the 1997 financial crisis, Thai banks have learned hard lessons, as have depositors, business operators and regulators. And the economy is still growing well. There is nothing to worry about.

flexible - easy to change
revisable - can be changed if needed
ensure - to make certain that something happens or is done รับรอง ให้ความมั่นใจ ให้การยืนยัน 
efficient - produces a lot from few resources; doing a task with no waste of time, money or energy
ensure efficient risk management

Mr Singha agreed with the government's suggestion that deposit protection should be flexible and revisable to ensure efficient risk management.

stability - when a situation does change suddenly and unexpectedly (in an unpredictable and surprising way), so people can operate normally and successfully - ความมีเสถียรภาพ ความมั่นคง
attractive - worth having or doing
offer attractive rates to gain deposits

He said a high level of protection encourages depositors to choose banks by rates rather than by their stability. That might lead to the weakening of banks as they offer attractive rates to gain deposits.