100 years old, the Government Savings Bank is becoming young again, helping rural communities, with only 1.1% non-performing loans,
Photo above of the "boat banking" service offered by the Government Savings Bank (GSB). People who live next to the river use a small pink flag with the GSB logo to call a boat which will then come and receive their bank deposit (Read article about the service).
With deposit protection (deposit insurance) at commercial banks falling to just 1 million baht by August 2012, some large depositors will be moving to government banks such as the Government Savings Bank (GSB). (Read articles: #1 and #2).
Click button to listen to Government Savings Bank to download
GSB eyes second rank, Leader in accounts, building assets too by Wichit Chantanusornsiri
The Government Savings Bank has set its sights on jumping up the ladder to become Thailand's second-largest bank within two years when the state-owned bank marks its 100th anniversary.
The bank, with 1.63 trillion baht in assets, currently trails behind Bangkok Bank, Krung Thai, Siam Commercial Bank and Kasikornbank in terms of asset size.
But within two years, the bank expects assets to jump to 2 trillion baht, likely pushing the bank to the second spot in terms of size.
Founded in 1913 with seed capital of 100,000 baht from King Rama VI with the objective of educating the Thai people about banking services and the value of savings. Its capital base now stands at 109 billion baht, with 863 branches as of April.
Lersuk Chuladesa, the GSB president and chief executive for the past three years, said he was confident in the bank's strong growth prospects.
He said that in terms of deposits and loans as of July, the GSB had already passed Krung Thai Bank to take the second spot in size.
But frankly, building up asset size isn't difficult. We stand outside the deposit protection law, and under the GSB Act, 100% of all deposits are fully protected," Mr Lersuk said.
As of last month, deposit protection at all commercial banks became restricted to no more than 50 million baht per account, and will fall to just 1 million in August 2012.
While local banks say the reduction in deposit protection, first started in 2008 with the creation of the Deposit Protection Agency, is unlikely to result in a massive shift in deposit funds, analysts expect some transfers to the government bond market or state banks such as the GSB by large depositors wanting to minimise any potential risk.
The past three years have already been eventful ones for Mr Lersuk, who recently received a SEPO Award as top executive by the State Enterprise Policy Office. Since he took office, the bank's assets have more than doubled to 1.63 trillion baht from 770 billion, while deposits have grown to 1.376 trillion from 660 billion. Outstanding loans have shown similar growth, now at 1.25 trillion baht compared with 499 billion three years ago.
The bank ranks as the largest in the country in terms of deposit accounts at 18 million, while its loan book is one of the cleanest in the system with non-performing loans of just 1.1% of total credit outstanding.
Net profits this year are projected to rise over last year to 20 billion baht, even counting 5.4 billion baht set aside for future employee pension expenses.
One factor behind the bank's strong growth is its role as a vehicle to support community and rural development policies, whether it be operating the People's Bank microfinance scheme or the village funds.
The village fund programme, originally set up a decade ago to support rural entrepreneurship, has since evolved into community banks serving as a new financial arm of the GSB itself, where loans from the main bank are relent through the community banks to serve local needs. To date, 13,000 community banks have been set up, with another 7,000 awaiting registration.
The bank has also been gradually strengthening its accounting practices to match its commercial competitors. The GSB's capital adequacy ratio, under Basel 2 banking standards, now stands at 12.4% to 12.5%, well above the 8.5% minimum required by the Bank of Thailand but still under the 15-16% ratio of Thailand's top commercial banks.
One accounting rule, TAS 19 regarding the booking of employee benefits as expenses, has forced the bank to revalue its properties to help shore up its capital base. Of the bank's 12,500 employees, 7,000 are under a pension scheme, in which actuaries estimate total potential liabilities at around 45 billion baht.
To prevent the bank's capital base from shrinking excessively or forcing the Finance Ministry to inject additional capital, accountants are looking to modernise asset valuations for its existing properties, such as the GSB headquarters on Phahon Yothin Road.
The bank estimates it may be able to raise tier-two capital by as much as 10 billion baht as a result of new asset valuations to shore up its capital base.
(Source: Bangkok Post, GSB eyes second rank, Leader in accounts building assets too, 12/09/2011, Wichit Chantanusornsiri, link)
Government Savings Bank (GSB) - the oldest government run bank started in 1913 (See history)
deposit - to leave something somewhere ทับถม, สะสม
bank deposit - money put into a bank account (for safe keeping and to earn interest)
depositors - people who keep their money at a bank in exchange for interest payments
deposit funds - money in bank accounts
deposit protection - same as "deposit insurance" (the government pays depositors for the money they lose if the bank fails)
deposit insurance - when the government promises to pay back depositors with money at the bank, if the bank fails (a safety net that promotes financial stability in an economy) (See Wikipedia)
bank accounts - where depositors keep their money at the bank
accounts - same as "bank accounts"
deposit accounts - same as "bank accounts"
leader in accounts - is the bank with the most bank accounts (has more bank accounts than any other banks)
rank - the position or level of something in a group [example: employee in an organisation ตำแหน่ง]
eyes second rank - making plans to become the second largest bank in Thailand
assets - a thing of value that a person or a company owns, for example: stocks, bonds, real estate, loans to others, or money ทรัพย์สิน
building assets - increasing assets; increasing the loans it makes (a bank's assets are its loans, a bank's liabilities are its deposits, roughly)
capital - money invested in a business (banks have special laws about levels of capital they must keep to remain safe) (See glossary)
capital base - the bank's capital
inject - put into
additional capital - more capital
inject additional capital - added to the bank's capital (in order to make it financially stronger and meet regulatory requirements)
shore up its capital base - same as "inject additional capital"
adequacy - good enough; acceptable
standards - 1. an acceptable level of quality or achievement; 2. a rule which should be obeyed มาตรฐาน, บรรทัดฐาน, กฎเกณฑ์, กรอบ
capital adequacy ratio (CAR) - a ratio of a bank's capital to its risk (a measure of the amount of a bank's core capital expressed as a percentage of its assets weighted credit exposures, definition: as Tier 1 capital + tier 2 capital / risk weighted assets) (See Wikipedia)
Basel 2 banking standards - standards used worldwide for regulating the capital adequacy ratio of banks, "...recommendations on banking laws and regulations issued ... in June 2004, is to create an international standard that banking regulators can use when creating regulations about how much capital banks need to put aside to guard against the types of financial and operational risks banks face... Advocates of Basel II believe that such an international standard can help protect the international financial system from the types of problems that might arise should a major bank or a series of banks collapse. In theory, Basel II attempted to accomplish this by setting up risk and capital management requirements designed to ensure that a bank holds capital reserves appropriate to the risk the bank exposes itself to through its lending and investment practices. Generally speaking, these rules mean that the greater risk to which the bank is exposed, the greater the amount of capital the bank needs to hold to safeguard its solvency and overall economic stability" (See Wikipedia)
seed - the cause of a feeling or situation, or the early stages of it ต้นกำเนิด
seed capital - money to start a business
microfinance - a system of borrowing to support poorer people living in a rural agricultural economy (See Wikipedia)
village fund - a government program that gave each village one million baht to loan out to people in the village (Read academic paper #1 and #2)
community banks - small local banks that loan to small local businesses
loans from the main bank are relent through the community banks
role as a vehicle to support community and rural development policies - it helps local communities develop businesses (and local people support themselves financially)
role - the function, position or purpose that someone or something has in a situation, organisation, society or relationship บทบาท
vehicle - something used to help achieve goals (a tool)
support - help, by giving money, for example สนับสนุน
community - local people, all the people who live in a local area or place ชุมชน
rural - farming area; connected with the countryside outside big towns and cities ในชนบท, บ้านนอก
loan - an amount of money that a person, business, or country borrows, especially from a bank เงินกู้
outstanding - currently exist, have not ended yet (not paid yet, not paid back yet)
outstanding loans - loans that have not been paid back by the borrower yet
loan book - all the loans that a bank has
credit - loans; money that you owe someone (a bill that grows until you pay it off at the end of the month, for example) เครดิต เงินกู้ทั้งหมด
credit outstanding - same as "outstanding loans" above
non-performing loans (NPLs) - a loan that is in default or close to being in default (See Wikipedia)
in default - when a person fails to pay back a loan, as promised
pension - a regular payment by a company or the government to people after their retirement; a saving system for retirement and old age เงินบำเหน็ด บำนาญ (See Wikipedia)
accounting rule, TAS 19 - an accounting rule concerning employee benefits ... includes wages and salaries as well as pensions, life insurance...explains the accounting for longer term employee benefits and post employment plans such as defined benefit retirement plans" (See Wikipedia)
book as expenses - record in the accounting system as expenses or costs of doing business
employee benefits - things like health insurance that employees receives in addition to their salary and wages
booking of employee benefits as expenses - record employee benefits such as health insurance or pension as expenses
actuaries - experts who calculate risks in order to price insurance (the likelihood of dangerous events that cause harm and loss happening) (example: estimate the long-term average damage due to events such as earthquakes, tsunamis, storms, flooding so that property insurance can be priced and adequate reserves can be set aside to pay insurance claims, if these events happen)
revalue its properties - get a new estimate of the value of the real estate owned (that reflect recent price changes)
valuations - an estimate of the value of something
asset valuations for properties - estimating the value of a piece of land; how much the land could be sold for
estimate - guesses an amount (not exact); to say what you think an amount or value is or will be, either by using available information or by guessing คาดคะเน โดยประมาณ
liabilities - debts; the amount of money that a company or organization owes to others (liabilities + owners' equity = assets) หนี้สิน หนี้ขององค์กร
estimate total potential liabilities - total liabilities that the bank could have (under unfavourable events; worst case)
eternal - lasting forever, never ending
eternal youth - always being young, never growing old
set its sights on Y - making a plan to do project or activity Y (making Y into a goal that it will work to achieve)
jumping up the ladder - raise its rank or ranking
set its sights on jumping up the ladder to become Thailand's second-largest bank
state-owned bank - a bank owned by the government (with different goals than profit maximizing privately owned "commercial banks")
commercial - for business purposes
commercial banks - privately owned banks such as Bangkok Bank, Kasikorn Bank, etc
anniversary - a date when you celebrate something that happened in a previous year that is important to you วันครบรอบ
marks its 100th anniversary - celebrate 100 years of life or existence (have some special event to remember or "commemorate")
trails - is behind in a competition (example: the second place competitor in the foot race, trailed the competitor by a whole minute)
currently trails behind Bangkok Bank - is behind Bangkok Bank now (in the banking industry)
the second spot in terms of size - the second largest
branches - bank branches, local banks that people go and do their banking at สาขา
local - 1. in this country (here: Thailand); 2. in a community
local banks - 1. banks in Thailand; 2. banks in local communities
objective - what you plan to achieve; goal; aim; purpose เป้าหมาย
confident - being certain of abilities, having trust in people, plans, or the future มั่นใจ
prospects - the possibility that things will happen, especially something good; the chances of being successful ความเป็นไปได้ (See glossary)
restricted - limited or controlled ซึ่งถูกยับยั้ง, ซึ่งถูกควบคุม ถูกจำกัด,ถูกจำกัดวง
creation - the act of making something new การสร้าง
massive - very large in size, amount or numberใหญ่โต มหาศาล
shift - to transfer; to move from one place to another เคลื่อนย้าย
massive shift in deposit funds - people taking their money out of the bank and putting it somewhere else (that gives them more money for their money)
funds - an amount of money kept for a special purpose
transfers - changing location โยกย้าย
bonds - an agreement by a government or other organization to pay back money lent by investors plus fixed interest on a particular date (See Wikipedia)
government bonds - the way that the government raises the money it needs to operate
transfers to the government bond market - when people take their money out of banks and buy government bonds (because they offer a higher return)
minimise - to reduce something harmful or unpleasant to the smallest amount or degree ลดให้เหลือน้อยที่สุด ลดจำนวนลง
potential - possible ความเป็นไปได้
risk - the possibility that something dangerous or unpleasant might happen ความเสี่ยง
minimise any potential risk - make less dangerous
eventful - full of interesting or important events เต็มไปด้วยเหตุการณ์ที่สำคัญ
projected - expected, forecast; the amount that experts believe it will be in the future
projected to rise - experts believe it will increase in the future
employee - someone who is paid regularly to work for a person or an organisation ลูกจ้าง
factor - a fact or situation which influences the result of something ปัจจัย
bank's strong growth - when the bank's business increases in some way (growth in size, growth in revenue, growth in profit, etc)
scheme - a plan that is developed by a government or large organisation in order to provide a particular service for people แผนการ โครงการ
fund - money provided for some use เงินทุน กองทุน
decade - a period of ten years ทศวรรษ, ระยะเวลา 10 ปี
entrepreneurship - the practice of starting and running businesses
arm - a part of an organisation that deals with a particular activity, in this case, shipping ส่วนหนึ่งของ
financial arm of the GSB - a part of GSB that deals with finance (making loans to "finance" things, such as small local businesses)
registration - recording in an official list
accounting - the work of keeping and checking financial records for a company or organization (See Wikipedia)
practices - ways of doing things commonly used; ways of doing commonly repeated tasks
accounting practices - the rules, standards and ways of doing accounting used everyday in an organization
match - to do or look the same as ซึ่งไม่คู่ควร
match its commercial competitors - to achieve the same level as the commercial banks it competes against
headquarters - the place where an organisation or company has its main offices; the location from where a large company or organisation is controlled สำนักงานใหญ่ กองบัญชาการ
estimates - guesses of what the size, value, amount, cost, etc. of something might be การประมาณค่า
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