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Depositors spooked by Y2K no problem for financial system

Bank withdrawals hit B15bn per day

Parista Yuthamanop

Bank withdrawals by jittery depositors due to Y2K fears will have no impact on the financial system, says Kitti Patpong-pibul, deputy governor of the Bank of Thailand.

Mr Kitti said withdrawals over the past week had reached as high as 15 billion baht per day, but that this was expected to fall to just 1.5 billion by the end of the week.

Commercial banks have drawn down 146 billion baht from the central bank since early this month as extra cash reserves for withdrawals and salary payments, Mr Kitti said.

Bank branches in Bangkok have withdrawn 90 billion baht, compared with 50 billion in the provinces.

The central bank forecast total withdrawals related to Y2K concerns to reach 239 billion baht, with withdrawals falling off this week, Mr Kitti said.

"Some depositors still have misunderstandings about the impact of Y2K, which has driven the withdrawal amount higher. However the withdrawals are not beyond the central bank's expectations."

Many companies have paid their December salaries and bonuses in advance, to help ease network loads over the new year.

The central bank's Y2K command centre started operating yesterday, with a few depositors calling in to question the security of their money.

The centre will monitor the impact of Y2K on financial services to individuals, and on payment systems among bank branches nationwide.

"The centre will have a contingency plan to replace any malfunctioning financial services systems of banks, in case they cannot fix the problems in time," Mr Kitti said.

The centre will also be able to help with liquidity problems, suspend some services or relax regulations if there are problems with Y2K compliance.

It will also communicate closely with overseas financial institutions and other local organisations of the situations.

While the central bank and the Securities and Exchange Commission have offered no guarantees against Y2K, regulators have said that they remain confident about the overall compliance of the financial system.

The SEC recently ordered all parties concerned to simulate their contingency plans for the Y2K problem, back up all information both in document form and in electronic files, send official supporting statements to their customers and mutual fund unit holders.

In addition, they must have their staff stand by during the critical Dec 31-Jan 1 transition period, to examine and test their working systems and compile reports for the SEC.

Both the SEC and the SET will have command centres operating in Bangkok from Dec 31 to Jan 4.

) Copyright The Post Publishing Public Co., Ltd. 1999 Last Modified: Tue, Dec 28, 1999

-- Homer Beanfang (Bats@inbellfry.com), December 28, 1999