Thai banks slash interest rates for foreigners

PHUKET: Thai banks here and across the country have quietly followed the legions of tuk-tuk drivers and street vendors who practice “two-tier” pricing – one for Thais and another for foreigners. In this case, the pricing relates to interest paid on savings accounts and fixed deposits. While the rates paid to foreigners vary from bank to bank, almost all are substantially lower than the rates paid to Thais. The sole exception to the two-tier interest policy in Phuket is Bank of Asia, now majority-owned by Dutch banking giant ABN-Amro. It currently pays 3.25% on savings, regardless of the nationality of the account holder. A spokesperson for the nation’s central bank, the Bank of Thailand (BOT), said that the institution had not issued any guidelines or directives relating to deposit interest paid to foreigners, and that it was up to the banks themselves to set their own interest rate policies. The only stipulations the BOT has made are that banks must keep their interest rates below a ceiling set each week by the central bank, and that they must post an up-to-date statement of all rates in their banking halls. In the six banks checked by Gazette reporters this afternoon, the notices were posted, but in Thai only. The Chairman of the Phuket Bankers Association, Chaiyos Chinda-Udomset, who is also vice-president of the Phuket Branch of Siam Commercial Bank, told the Gazette he was not sure why his head office in Bangkok was making a distinction between Thais and foreigners. He theorized that it might be because Thai banks are awash with baht and wanted to reduce their interest-bearing deposits. One way to do this, he said, would be to lower interest rates to unattractive levels. But when asked what percentage of the deposits in his bank are from foreigners, he agreed that it was minuscule. When asked why banks did not lower rates across the board, Khun Chaiyos said that Thais are accustomed to the idea of savings accounts, and that to lower rates too far might erode public confidence. The banks have not told their foreign depositors about the introduction of the policy. Some say they will pay the “Thai rate” to foreigners who can produce a work permit. But the offer is meaningless to most Phuket expatriates since they don’t even know that the rate on their deposits has been slashed. A Gazette online poll conducted earlier this week asked: “Did you know that Thai banks pay 3.5% on savings from Thais, and 0.5% to foreigners?” Among the 280 expatriate participants, 73% said “No”. Asked whether his bank had alerted foreign depositors to the new policy, Khun Chaiyos confirmed that it had not, and has no plans to do so. One foreigner approached outside of his bank said that he had had a “reluctant account” there for seven years and had “learned to live with surprises”. And the British Ambassador to Thailand, Sir James Hodge, in Phuket earlier this week, told the Gazette, “Any suggestion that foreigners should be treated differently…from Thais is something which we would not welcome, which we would encourage the authorities to change.”