February 4, 2014 / 6:20 AM / in 4 years

Thai state bank KTB says won't lend to controversial govt rice scheme

BANGKOK, Feb 4 (Reuters) - State-owned Krung Thai Bank Pcl (KTB) said it won’t give loans for the government’s controversial rice-buying scheme mainly due to legal risks, exacerbating funding troubles for the caretaker government after private banks took a similar stance.

The rice intervention scheme has helped fuel anti-government protests in Bangkok since November because of allegations of corruption and the mounting cost to the taxpayer of grain left unsold in state stockpiles.

The government is struggling to find 130 billion baht ($3.95 billion) to pay farmers, some of whom have been waiting for their money for months.

“Some legal issues are not clear and the bank will not get involved in the rice-buying scheme at this point,” KTB President Vorapak Tanyawong told reporters on Tuesday ahead of a board meeting.

Vorapak said Krung Thai was not getting mixed up in politics but it was unsure whether the present government had the authority to guarantee the loan.

Krung Thai is Thailand’s second-largest lender by assets and is controlled by a state fund through its 55 percent ownership.

Executives of top lender Bangkok Bank said at a public forum last week that the bank won’t fund the rice scheme, while officials of fourth-ranked Kasikornbank told reporters last week that they won’t be involved with the scheme. Both banks are privately owned.

And TMB Bank, 26.1 percent owned by the Finance Ministry, said in a statement on Jan. 31 it would not join the government’s scheme because of the complicated legal problems.

Last week the finance ministry called off a tender for a 20 billion baht ($607 million) bridging loan as part of the 130 billion baht borrowing plan because the interest rates demanded by banks were too high, the Public Debt Management Office said.

Krung Thai Bank and other major banks said they did not take part in that tender.

A general election was held on Sunday but voting was disrupted in some constituencies and parliament seems unlikely to convene for weeks, leaving a caretaker government in charge of the country with only limited powers.

“We don’t want to get involved in corruption,” said KTB’s Vorapak, as about 500 bank employees staged a protest at its headquarters against any attempt by the government to put pressure on it to lend to the rice scheme.

By the midday break, KTB shares were down 1.8 percent, compared with the main index, which was 1.2 percent lower. ($1 = 32.9450 Thai baht) (Writing by Khettiya Jittapong; Editing by Alan Raybould and Muralikumar Anantharaman)

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