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WALL STREET FALLOUT
KANANA KATHARANGSIPORN
The spreading global credit crisis may cause the Government Housing Bank (GH Bank) to freeze its 40-billion-baht securitisation plan, president Khan Prachuabmoh acknowledged yesterday.
The state bank's establishment of a mortgage insurance business will also be affected by shrinking liquidity in the capital and financial markets.
Mr Khan said the bank's securitisation plan might be postponed as investors were more cautious in light of the Wall Street meltdown precipitated by the bankruptcy of Lehman Brothers.
However, he said the bank would keep the plan in hand and would be ready whenever market conditions improved.
At the same time, the financial problems faced by the giant insurer AIG will affect the bank's plan to set up mortgage insurance as insurers, especially large ones, will be hesitant to make new investments.
The bank's mortgage insurance plan is awaiting final approval from the Finance Ministry, following the issuance of a Royal decree that allowed GH Bank to do other businesses and set up a mortgage insurance firm.
''Now fund-raising should be done in the country as local financial institutions have more liquidity while overseas investors are facing a credit crunch,'' Mr Khan said yesterday.
He said the bank would not increase interest rates as it would have a negative impact on its customers, despite high competition among local commercial banks to attract depositors with higher deposit interest rates.
Atip Bijanonda, president of the Thai Condominium Association, said the global credit crisis would obstruct fund-raising plans and business expansion of listed property firms through the capital market.
''Some financial institutions will limit new loan releases as they have had some impact from the global credit crisis,'' he said.
At the same time, the US economic slowdown would cause a decrease in consumption in he world's biggest market. This would have a strong impact on Thai exports. If Thai exporters cannot find other markets [to replace US market], property will ultimately see an impact.
Mr Atip said new property developers might find it more difficult to seek project loans as banks would be more cautious.
''The Lehman Brothers crisis affects the capital market. When the market slows down, capital movement from the stock market to other investment sources will get stuck. This might cause some hesitation to invest in the real estate market,'' he said.
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