Thai financial system not immune to weak political environment – S&P

SINGAPORE - A recent surge in cash withdrawals from a government-owned bank in Thailand suggests the currently weak political environment is starting to affect the country's financial system, but ratings agency Standard & Poor's sees the incident as politically motivated, rather than a sign of loss of confidence in any bank.

A reported Thai baht (THB) 60 billion (US$1.8 billion) in net deposits was withdrawn from Government Savings Bank in just three days - about 3% of its deposit base. “The surge in withdrawals marked a political backlash after GSB extended a loan to the Government-owned Bank for Agriculture and Agricultural Cooperatives (BAAC), which is the paying agent for a controversial rice-subsidy scheme,” S&P says.
"GSB was caught in the crossfire. The run on the bank was limited in nature and is unlikely to have a contagion impact on the banking system," said S&P credit analyst Deepali Seth. "But the incident has exposed the vulnerability of the financial system." www.sandardandpoors.com (ATI).