Cablegate: Thai Banks Begin Tightening Credit for Foreign Firms

VZCZCXRO3089
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #3070 2841007
ZNR UUUUU ZZH
P 101007Z OCT 08
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC PRIORITY 4650
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
INFO RUEHCHI/AMCONSUL CHIANG MAI PRIORITY 5705
RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY

UNCLAS BANGKOK 003070

STATE FOR EAP/MLS AND EB
STATE PASS TO USTR
TREASURY FOR OASIA
COMMERCE FOR EAP/MAC/OKSA
SINGAPORE FOR FINATT BAKER

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON EINV ETRD TH
SUBJECT: THAI BANKS BEGIN TIGHTENING CREDIT FOR FOREIGN FIRMS

Sensitive But Unclassified. For Official Use Only.

REFS: A) BANGKOK 2782 B) BANGKOK 2810

1. (SBU) Concerned about the creditworthiness of foreign business
entities in Thailand, Thai banks are reportedly tightening lines of
credit for U.S. firms. The Bangkok Post reported October 9 that
Thai banks are cutting back funding lines to U.S. companies "as
credit risks have jumped sharply in recent days." According to bank
executives cited in the article and confirmed by a bank analyst with
whom we spoke, local banks are fearful of rolling over short-term
credit lines to international clients, particularly U.S. firms, as a
result of the global credit crunch. The press report said some
banks are concerned that foreign funding will simply be transferred
offshore to help parent companies starved for cash.

2. (SBU) However, not everyone concurs with the press assessment.
The CEO of a Thai bank with whom we spoke concurred with skeptical
bank executives cited in the press article, stating that he is
maintaining lines of credit to foreign corporations, as well as
local. Nonetheless, the head of one prominent U.S. bank in Thailand
noted that Thai banks are indeed tightening credit lines for foreign
banks fearful that U.S. banks now are at increased risk. The
executive noted that tightening credit for corporations is difficult
to do overnight, but Thai banks could begin to do so. The Embassy
has not heard from U.S. companies themselves that this is happening
as yet.

3. (SBU) Comment: The Thai stock market plummeted again October 10,
this time prompting a temporary moratorium on trading in the
afternoon when the drop hit 10 percent. While the government is
continuing to assure the financial and business communities that
there is no liquidity problem, equity drops of this magnitude cannot
help but make Thai banks more wary. We will keep an ear out for
specific cases of U.S. firms being denied credit. End comment.

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