SCB ready to extend its relief to the hotel industry
Debt Relief Program May Be Extended
Customers wait to be served at a branch of Siam Commercial Bank in Bangkok.
Siam Commercial Bank (SCB) is ready to extend its debt cancellation program for the hospitality sector in case the Bank of Thailand does not extend its targeted debt relief measures which expire in June.
The central bank implemented targeted debt moratorium measures in mid-October 2020 for small and medium-sized enterprises (SMEs) with a line of credit of less than 100 million baht and having difficulty securing the loan. service their existing debts.
The targeted measures are due to end on June 30 of this year. This only applies to targeted SMEs that fail to repay loans to financial institutions because their business activities have not fully recovered.
The measures are a fitted extension of the large-scale debt relief measures rolled out by the central bank on April 23 last year to help SMEs recover from the fallout from the pandemic, which ended on October 22. 2020.
The bank is ready to extend debt relief measures to commercial borrowers who cannot service their debt due to the impact of the pandemic, especially hotel operators, on a case-by-case basis, said SCB President Sarut Ruttanaporn.
SCB, Thailand’s fourth-largest commercial lender in terms of total assets, has hospitality loans outstanding of around baht 80 billion against the bank’s total loan portfolio of 2.2 trillion.
The bank’s hospitality loan portfolio accounts for the largest portion among its local banking peers. About 90% of the total outstanding loans in the Home Loan portfolio have requested debt relief measures using various methods, including a suspension of principal and interest, such assistance being offered on a case-by-case basis. case.
“Given the good credit quality of hotel borrowers [before the pandemic emerged], we are not so concerned about the quality of the assets and most of them are expected to resume normal business activities when the government reopens the country to foreign tourist arrivals, ”Sarut said.
On average, the loan-to-value ratio of the hotel business is quite low, hovering around 40-60%, and the majority of businesses are long-time SCB clients. Most hotel borrowers recorded positive business performance, but have since stumbled due to the pandemic.
The SCB is also waiting to assess clearer details about the asset warehousing program before deciding whether or not to participate in it, he said.
The Bangkok Post previously mentioned, the asset storage program in principle allows economic operators to suspend debt repayment and temporarily transfer real estate assets, as loan collateral, to their creditors within a specified time frame.
Commercial operators would then be allowed either to lease these frozen assets to creditors to continue their business activities, or to let the creditors manage the frozen assets.
Meanwhile, SCB plans to extend an additional line of credit worth 1.5 million baht to financially troubled Pace Development Corporation Plc for the Nimit Langsuan condominium project this year, Sarut said. .
The line of credit would allow the company to complete the luxury residential project by this year and begin the transfer of condominium units next year, he said. In this scenario, Pace would pay off debts of around 5 billion baht in 2022.
It was reported in March 2020 that Pace owed SCB 11 billion baht, of which 7 billion baht included loans backed by collateral.
Pace’s total liabilities stood at 19.6 billion baht compared to total assets of 18.4 billion in March 2020. Pace’s financial problems emerged in 2017 when he defaulted on a bill payment. change, many seeing his choice to use short-term debt instruments in the capital. market to finance long-term investment projects as a source of financial stress.