Thailand unlikely to bank on sub debt

Expectations that Thailand''s relaxation of tier 2 capital requirements will lead to a flood of international debt issues has been dismissed by bank capital experts, who predict activity will be dominated by buybacks and exchanges.

On August 23, the Bank of Thailand BoT amended its bank capital guidelines, giving domestic banks greater flexibility in being able to meet year end capital adequacy ratios of 8.5%. A new category of capital, upper tier 2 debt, was allowed for the first time, in order to enable the sector to boost weakened capital bases. Previously, although tier 2 debt could theoretically equal tier 1 debt, only lower tier 2 debt was allowed. Since this could not exceed more than 50% of tier 1 debt, the 100% figure was fairly meaningless.

However, while BoT officials have confidently stated that up to Bt160 billion $3.9 billion might...

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