- Greater Market Presence for Foreign Banks
- April 13, 2010 | Author: Sathaporn Jumsuk
- Law Firm: Mayer Brown JSM (Thailand) Limited - Bangkok Office
The Bank of Thailand (BOT) lifts the one-branch restriction for full branches of foreign banks in Thailand. Previously restricted to a single branch, a full branch can now open two additional branches.
Thailand's Financial Sector Master Plan ("Plan") was implemented in 2004 to develop an efficient, stable and competitive financial system.
Under Phase 1 of the Plan (2004-2008), foreign banks were authorised to operate as a full branch or a subsidiary. Both types could conduct full commercial banking services as Thai commercial banks. However, only one branch was allowed for a full branch, which also served as its principal office in Thailand. In contrast, a subsidiary could open a head office and up to four branches.
With Phase 2 now in full force, the BOT issued Notification No. SorNorSor. 1/2553, which took effect on 18 March 2010, permitting a full branch to operate two additional branches.
Full branches interested to establish an additional branch must first comply with the applicable laws and regulations of their home authorities. After that, an application, together with certain supporting documents, may be lodged with the BOT. The new branch can be a general branch, electronic branch (ATM), or currency exchange counter.
Once approval is granted, the additional branch must be set up within two years. The new branch must also comply with certain operational requirements under the BOT Notification No. SorNorSor. 63/2551 regarding criteria for operating a branch of a commercial bank.
Like any foreign investment measures, expect the new notification to have a ripple effect on the country's financial sector. With additional branches, foreign banks in Thailand can expand their customer base and improve their market presence. Customers can expect wider access to capital and better services. This may force local banks to shape up to maintain their market share. Otherwise, they risk losing business to foreign competitors.