TCRAP_Public/000825.MBX      T R O U B L E D   C O M P A N Y   R E P O R T E R

                             A S I A   P A C I F I C

             Friday, August 25, 2000, Vol. 3, No. 166


* C H I N A  &  H O N G  K O N G *

SHANGGONG CO.LTD: Debt-to-equity deal near
STAR CRUISES: Shareholders back plan to ease debt

* I N D O N E S I A *

PT BIMANTARA CITRA: Sheds assets to pay US$467M debt
PT BUMI MODEM: Debt-for-equity swap planned

* J A P A N *

HIKARI TSUSHIN: Share stakes sold to pay off debt
KABUTO DECOM: RCC takes legal action vs. overseas assets
SNOW BRAND MILK PRODUCTS: Gov't shuts down Hokkaido ops
TOKYU DEPT.STORE: Posts $97M 1H loss

* K O R E A *

HYUNDAI SECURITIES: Chairman to face suit

* M A L A Y S I A *

MBF CAPITAL: Seeks preliminary advice on restructuring
WOO HING BROTHERS: Special administrators in rehab talks

* P H I L I P P I N E S *

FAIRMONT HOLDINGS INC.: Seek restructure of P600M debt
NATIONAL STEEL CORP.: Interim body to oversee
NATIONAL STEEL CORP.: S'holders warned of liquidation

* S I N G A P O R E *

HONG LEONG ASIA: posts net loss
NAT STEEL: Industrial biz suffers $11M loss
PRESSCRETE HOLDINGS: Incurs losses in first half

* T H A I L A N D *

DEUTSCHE BANK: BOT cuts off from money-market
SAHAPATANAPIBUL GROUP: In cost-reduction mode
SIAM CITY BANK: Authorities' delay worsening condition
STANDARD CHARTERED BANK: BOT cuts off from money-market

C H I N A  &  H O N G  K O N G

SHANGGONG CO.LTD: Debt-to-equity deal near
The Agricultural Bank of China is due to become Shanggong
Co Ltd's largest shareholder via a debt settlement deal
with Shanggong's parent Shanghai Light Industry Holding
Group, a source close to the deal said.

The source said Shanghai Light Industry has undertaken to
transfer its stake in Shanggong to the bank in repayment
for debts owed by a steel-making subsidiary of Shanggong.
He said the subsidiary is close to bankruptcy, but Shanghai
Light Industry, an investment arm of the Shanghai municipal
government, is prepared to take responsibility for the
company's debts in order to prevent a large number
of lay-offs from the firm.

The source said he believes ABC may in turn plan to sell
its stake in Shanggong to Great Wall Asset Management Co
Ltd.  At 2:10 pm, Shanggong's A-shares were 1.0 yuan higher
at 16.87, while its B-shares were 0.002 usd higher at 0.33.
(AFX News Limited  24-Aug-2000)

STAR CRUISES: Shareholders back plan to ease debt
Shareholders of Star Cruises, Asia-Pacific's largest
cruise-ship operator, have approved a plan to reduce debt
by raising up to US$800 million on the Hong Kong stock

The Singapore-based company, whose fleet includes SuperStar
Virgo and SuperStar Aries, plans to sell 300 million new
shares - or 32 per cent of its enlarged share capital.
Star Cruises, which is 27 per cent owned by Malaysian
company Resorts World, will delist from its primary listing
in Luxembourg once trading starts in Hong Kong.  Shares in
the company will remain available over the counter in

At yesterday's extraordinary general meeting, shareholders
also approved a four-for-one bonus issue priced at 10 US
cents per share.  Star Cruises will use the proceeds to
lower debt following its successful bid in January to gain
control of Norway's NCL Holdings.  The company borrowed
US$600 million from 16 banks and S$322 million (about
HK$1.46 billion) from shareholders to finance the takeover.

Star Cruises, whose fleet of 20 ships visits the mainland,
Hong Kong, Japan, Malaysia, Taiwan and Thailand, is also
expecting the delivery of two US$380 million German-built
liners over the next two years.  Resorts World has pledged
to invest US$490 million in the global offering.

Gerard Lim, vice-president for corporate planning, said
Hong Kong was a key financial centre and a listing made
sense.  Mr Lim said there was also a greater awareness of
the Star Cruises brand name in the SAR than elsewhere in
the region.

HSBC Holdings and Credit Suisse First Boston will manage
the share sale.  The company recorded an operating income
of US$84.8 million for the six months to June 30, compared
with US$43.5 million the previous year.  The jump was aided
by the inclusion of NCL's figures in the results.

Net income before acquisition charges was US$52.8 million.
Basic earnings per share in the first half were 0.12 US
cents compared with 1.27 US cents in the period last year.
The purchase led to US$40.6 million of additional interest
expenses arising from financing the acquisition. (South
China Morning Post  24-Aug-2000)


PT BIMANTARA CITRA: Sheds assets to pay US$467M debt
Having seen his business empire collapse with the onslaught
of the economic crisis, Bambang Trihatmodjo, the younger
son of former president Suharto, is now attempting to put
his corporate house in order.

Over the past few months, Mr Bambang, through his
diversified listed holding company Bimantara Citra, has
been shedding assets to repay the US$467 million (S$801
million) he owes the Indonesian Bank Restructuring
Agency (Ibra) and restructure his unwieldy business empire.
The conglomerate is the 11th-largest debtor under Ibra
which recently sold Bimantara's stakes in
telecommunications company Satelindo to Solomon Smith
Barney and Citibank.

On Monday, Mr Bambang sold his entire 29.22 per cent stake
in Singapore-listed Osprey Maritime after Bimantara had
off-loaded a 13.75 per cent stake in PT Plaza Indonesia
Realty (which owns one of Jakarta's largest shopping malls
and the Grand Hyatt Hotel), its entire 15.53 per cent
holding in Nestle Indonesia, and its 90 per cent stake in
automotive concern Bimantara Cakra Nusantara.

Market analysts told BT Bimantara's restructuring plan had
re-ignited investor interest in the company as it still
controls some of Indonesia's most coveted assets. The
company's main businesses are in media and broadcasting,
telecommunications, infrastructure, transportation, hotel
and property, and financial services. Its most lucrative
businesses currently are in transportation and shipping,
which comprises five companies, and its 9 per cent share of
the RCTI television station.

The company's share was actively traded yesterday by
several foreign broking houses, rising 10 rupiah to close
at 1,235 rupiah. But Mr Bambang's association with
Bimantara continues to cast a long shadow over the
conglomerate given his political liability.

While he has been questioned by the attorney-general for
his alleged corruption, his father, former president
Suharto, is to face trial next week for corruption and the
outcome of the proceedings is expected to have far-reaching
implications for his family and cronies.

"There is a lot of concern in the market about the pending
trial," said Andre Cita from Kim Eng Securities. "The share
price of Bimantara is currently undervalued because of its
links to the former first family but there is a feeling
that once the restructuring is completed the stock could
improve dramatically."  (Business Times  24-Aug-2000)

PT BUMI MODEM: Debt-for-equity swap planned
Financing company PT Bakrie Finance Corporation said on
Wednesday that it planned to swap part of its Rp 1.6
trillion (US$197 million) debt for shares in its publicly
listed affiliate PT Bumi Modern.

President of Bakrie Finance Mustafa I Jatim said that
several creditors had given their initial agreement for the
debt-to-equity-and-assets swap proposal.

"Some creditors preferred settling Bakrie's debt through
Bumi Modern's shares instead of having to exercise their
rights to seize Bakrie's assets," Mustafa said during a
media briefing at the Jakarta Stock Exchange.

Bumi Modern, a tourism, hotel and oil concern, is a
subsidiary of Bakrie Finance's parent company PT Bakrie
Capital Indonesia.  Under the complicated debt
restructuring proposal, Bakrie Finance plans to pay part of
its debt or about Rp 915 billion with its claims on third

Mustafa said that because the claims had been taken over by
parent company PT Bakrie Capital Indonesia, the latter
would be responsible for paying the Rp 915 billion debt by
issuing convertible bonds for the same amount to Bakrie
Finance's creditors.  He said that the bonds would be
converted into Bumi Modern shares.

Bakrie Finance owes some Rp 434 billion to 13 domestic
creditors, some of which have been taken over by the
Indonesian Bank Restructuring Agency (IBRA), and another Rp
42 billion to six affiliated creditors.  He said that the
creditors preferred to accept Bumi Modern's shares because
this presented a better alternative to the other assets
belonging to Bakrie Finance.

"We have assets spread all over the country. I am not
kidding if I tell you that we have tractors in South
Kalimantan and even in Irian Jaya," he said.

The creditors also based their choice on the recommendation
for a debt- to-equity-and-assets swap given by auditor
PricewaterHouseCoopers, which conducted a due diligence on
Bakrie at the latter's request.  Mustafa said that Bakrie
Finance's foreign debt amounted to between $120 million and
$130 million or the equivalent of Rp 1.14 trillion.

The company last month survived a bankruptcy petition
brought by four Hong-Kong based creditors after the Supreme
Court overruled its earlier decision that declared Bakrie
Finance bankrupt.  Mustafa said that the company was
offering creditors its entire assets to pay its remaining
debts of about Rp 685 billion.

"A creditor may ask for one tractor, one ship and shares
worth US$1 million," he told The Jakarta Post.

He said that the company expected to hold a meeting with
its creditors by the end of this month or in September to
establish the term of reference for initial approval of the
debt-to-equity -and-assets swap.  Bumi Modern's rights
issue earlier this year was shrouded in controversy when it
raised some Rp 9 trillion to acquire oil company Gallo Oil
Ltd of the United Kingdom.

Analysts questioned the plan as Bumi Modern's total assets
constituted only about five percent of the rights issue
proceeds.  Furthermore, Gallo Oil is owned by a company
linked to businessman Aburizal Bakrie, the majority
shareholder of Bumi Modern.

Analyst Lin Che Wei has said that the acquisition of the
oil company was a ploy to transfer its assets into liquid
securities through "manipulated pricing" on the JSX.
According to him, Bakrie would then be better placed to pay
its debts using its Bumi Modern assets, whose book value
inflated following the acquisition. (Jakarta Post  24- Aug-


HIKARI TSUSHIN: Share stakes sold to pay off debt
Ailing Japanese Internet investor Hikari Tsushin Inc
reported on Wednesday it had paid back 25 billion yen in
loans to its president's personal asset management firm as
part of its restructuring efforts.

Earlier this year, Hikari Tsushin had borrowed the 25
billion yen from asset management firm Hikari Power to in
turn pay back loans to two bank syndicates before they came
due. Under the terms of those bank loans, Hikari Tsushin
was required to pay the loans off before the maturity date
if its debt ratings were downgraded by two or more levels.

At the time, Hikari ratings were placed under a watch for
possible downgrade by some ratings agencies. The company
sold off stakes in a number of companies, including 1.2
million shares in Tumbleweed Communications Corp., giving
it cash with which to retire debt. That sale raised 6.2
billion yen in profits.

KABUTO DECOM: RCC takes legal action vs. overseas assets
Resolution and Collection Corp. (RCC) has initiated legal
proceedings against real estate developer Kabuto Decom Inc.
to seize its overseas assets.

Kabuto Decom is a major borrower of the collapsed Hokkaido
Takushoku Bank. A special unit set up by the government to
deal with bad loans by failed financial institutions, RCC
plans to seize 15 billion yen ($139.5 million) worth of
Kabuto Decom group's assets in six locations, including a
U.S. resort hotel and a golf course.

SNOW BRAND MILK PRODUCTS: Gov't shuts down Hokkaido ops
The Hokkaido prefectural government Wednesday ordered Snow
Brand Milk Products Co. to suspend operations at its plant
in Taiki, Hokkaido.

The order was made after health officials discovered a
bacterial toxin in samples of powdered skim milk produced
at the plant. Health officials detected up to 20 nanograms
per gram (nannogram = one-billionth of a gram) of
enterotoxin A, a toxin produced by the staphylococcus
aureus bacterium and which causes food poisoning, in
samples. That was some five times higher than levels at the
company's Osaka factory, officials said.

TOKYU DEPT.STORE: Posts $97M 1H loss
Tokyu Department Store Co. recorded a 10.5 billion yen
(US$97 million) net loss for the half-year ended July.

For the same period last year, the company posted 5.1
billion yen net loss. The first-half loss this year also
was narrower than the 17.9 billion yen loss predicted
earlier.  The better-than-projected figure is attributed to
postponement to the second half of losses due to
liquidating cross shareholding and evaluation of shares in

Extraordinary loss for the first half totaled 15.6 billion
yen, including a 10 billion yen allowance for loss for
shareholdings in subsidiaries and about 5 billion yen for
loan-loss reserve to liquidate a subsidiary. The loss was
partially offset by deferral of 4 billion yen in income
tax payment and extraordinary gain of 800 million yen from
sale of a merchandise distribution center and other

At the same time, Tokyu Department Store reported that
sales and pretax profit figures fell short of earlier
targets. In the period, sales fell 2% to 120.1 billion yen.
Pretax profit hit 150 million yen, against a 710 million
yen loss for the same period a year ago. Operating
profit dipped 16% to 1.13 billion yen. (Asia Pulse  24-Aug-


HYUNDAI SECURITIES: Chairman to face suit
The Financial Supervisory Service yesterday decided to sue
Lee Ick-chi, chairman of Hyundai Securities Co., for
violating foreign exchange transaction laws.

The FSS will bring up Lee's case in its regular meeting
tomorrow prior to taking formal action against him. Lee is
accused of writing a memorandum to Hyundai Heavy Industries
vowing to compensate it for any damages the shipbuilding
firm might suffer as a result of backing a loan to Hyundai
Electronics from a Canadian bank.  The FSS will also
forward a recommendation calling for his dismissal.

Lee in April last year was penalized by the FSS for his
alleged involvement in stock price manipulation also
concerning Hyundai Electronics Industries, and he was
sentenced to a two-year prison term with three-year
probation. Lee is appealing that case. (Korea Herald  24-


MBF CAPITAL: Seeks preliminary advice on restructuring
MBf Capital Bhd said it is seeking preliminary advice to
implement a restructuring scheme for its group of

The company told the KLSE in a statement the restructuring
scheme had not been formulated at this stage. MBf Capital
also reported a first-quarter group shareholders' deficit
of RM1.478bil. And the company said it, with certain of its
subsidiaries, was undergoing an informal restructuring

The proposed disposal of a 31.62% stake, or 1.665 million
shares, in MBf Card Services Sdn Bhd to Advent
International Corp and Arab-Malaysian Capital Markets Group
Sdn Bhd for a maximum of RM53.156mil cash will see the
proceeds used to repay bank borrowings.

MBf Capital was replying to a query from the exchange on
reports speculating the company may implement a share
capital reduction. (Star Online  24-Aug-2000)

WOO HING BROTHERS: Special administrators in rehab talks
Special administrators of Woo Hing Brothers (Malaysia) Bhd
are in talks with Jiwa Ragam Sdn Bhd as to how to
restructure the company in order to settle or better manage
its debts.

Replying to a query from the Kuala Lumpur Stock Exchange
today, Woo Hing said the parties have not reached any form
of firm understanding on the matter. The single-largest
shareholder in the financially-troubled Woo Hing, Jiwa
Ragam is likely to remain the controlling party in the
watch retailing company after its debt restructuring.

Woo Hing had accumulated losses of RM45 million as at the
end of last year. Restructuring will necessitate a cash
injection, likely having to come from Jiwa Ragam.


FAIRMONT HOLDINGS INC.: Seek restructure of P600M debt
Fairmont Holdings Inc., formerly known as BW Resources
Corp., is asking Philippine National Bank to restructure
P600 million worth of debt in order to clean up its balance
sheet in line with its corporate and financial

In an interview, PNB president Feliciano Miranda Jr. said
the gaming and property firm had been trying to restructure
its debts since three months ago.  "BW has been negotiating
with us for a loan restructuring but that is still under
negotiation," Miranda told the INQUIRER.

Fairmont is co-borrower of a P600-million loan obtained by
Best World Gaming and Entertainment Corp., an online bingo
operator, from PNB.  Miranda said the loan was partly
secured by a parcel of land in Tagaytay owned by Fairmont,
a gaming and property firm controlled by businessman Dante

Besides being a creditor, PNB has a subsidiary--Beneficial-
PNB Life Insurance Co. Inc.--that owns 500,000 Fairmont
shares.  Another PNB unit, PNB Securities Inc., has been
named in a report prepared by the Securities and Exchange
Commission as one of the stock brokerages that engaged in
manipulative done-through transactions to prop up
Fairmont's share prices last year.

Fairmont, in its annual stockholders' meeting Monday, said
it would mortgage the Sheraton Marina property to raise
more funds to finish the hotel project. No bank or
financial institution that will provide such financing has
been identified. Hence, the indicative terms and conditions
of such financing have not been set.

The company expects to receive the highest possible loan
value for such property," the company said in its 1999
annual report.  The Sheraton Marina property is being
developed into a luxury hotel, casino and retail complex.

The Philippine Amusement and Gaming Corp., a state-owned
casino operator, is set to transfer its office to the
Sheraton Marina complex upon completion of the project.
Fairmont has remained unprofitable since its incorporation.
As of end-1999, the gaming and property firm recorded a
deficit of P50.703 million.

The merger with online bingo operator Best World Gaming has
likewise been put on hold due to a severe drop in the share
price of the company.  Best World Gaming, which holds the
exclusive franchise to conduct online bingo operations,
recently introduced Quick Pick, a modified version of
jueteng. (Philippine Daily Inquirer  24-Aug-2000)

NATIONAL STEEL CORP.: Interim body to oversee
The interim receivership committee (IRC) of the National
Steel Corp. (NSC) will create a working board that will
deliberate on various issues hounding the rehabilitation of
the debt-ridden steel firm, including finding a strategic
investor that will infuse fresh funds into it, IRC chairman
Monico Jacob said.

In a letter to Abdul Hamidy Hafiz, operations director of
Danaharta, Jacob said a management committee that would run
the day-to-day operations of the company would also be
created. Danaharta, a firm run by the Malaysian government,
is the trustee of NSC shares held by Hottick Investments
Ltd. of Hong Kong.

Hottick Investments is the majority shareholder of NSC with
82.5 percent of equity, while the Philippine government
through the National Development Co. owns 12.5 percent and
Marubeni Corp. of Japan holding the rest of the stocks. NSC
was closed in November last year due to cash flow problems.
It eventually applied for debt relief with the Securities
and Exchange Commission for its P16-billion loans.

Aside from securing a strategic partner, Jacob said the
working board would come up with an alternative proposal to
the rehabilitation plan now pending with the SEC. There
were reports that the IRC may have to come up with a new
rehab plan after it failed to secure a "white knight" that
would put up $600 million in new capital.

Its original rehabilitation plan calls for a strategic
investor that would pump in fresh equity into NSC, paving
the way for its reopening. The board would also decide on:

 Proposal of Allengoal Steel Fabrication and Trading Co.
for an eight-month lease of a portion of the plant owned by
NSC. It was earlier reported that IRC wanted Allengoal to
first settle its obligations to the company before any
agreement for leasing is approved;

 Ratification of the sale of NSC's minor assets as
mandated by the SEC; and,

 The appointment of executives that would run NSC's daily

The creation of the board and the mancom were discussed by
the IRC during a meeting with the NSC rehabilitation
steering committees with the representatives of Hottick
Investments last August 17.

The IRC is having a hard time finding a strategic partner
for NSC although various foreign groups have expressed
interest in acquiring the firm, including Dutch firm Ispar
International NV, Novolipetsk Iron and Steel Corp. of
Russia, Swiss-based Duferco Group, and Paris-based Pentium.

Last week, a group of local traders from the downstream
steel industry reportedly offered to put up P4 billion to
buy NSC. (Philippine Star  24-Aug-2000)

NATIONAL STEEL CORP.: S'holders warned of liquidation
The Philippines' largest steel concern could be liquidated
to settle its 14 billion pesos (RM1.4 billion) debt load
should its Malaysian shareholders fail to meet and act on
proposed rehabilitation measures.

The government-appointed interim receivership committee
(IRC) issued the warning after the National Steel Corp's
(NSC) Malaysian owners led by Hottick Holdings Ltd had
failed to call for a stockholders' meeting.

The IRC was formed by the Securities and Exchange
Commission (SEC) to oversee the rehabilitation of NSC which
had shut down its operations due to crippling debts and
inability to compete in the steel market. In a letter to
Malaysia's national asset management company Pengurusan
Danaharta Nasional Bhd, the IRC said that "should the
stockholders' meeting not materialise, we have no other
option but to recommend the liquidation of NSC."

Hottick had turned over its interests in NSC to Danaharta
as a trustee as part of the Malaysian government's efforts
to resuscitate ailing companies in which Malaysians have
controlling equity.  The IRC had requested Danaharta to
either send a representative to Manila or appoint the IRC
as its proxies to pave the way for a stockholders' meeting
and tackle various corporate matters vital to NSC's

These include the election of a new board of directors,
increase in authorised capital, conversion of creditor
banks' loans to equity and write-down of various assets
accounts of the company.

"These moves are critical to the entry of a new investor to
NSC and shall be the final and most critical component in
the successful implementation of the NSC rehabilitation
plan," the IRC said.

Among foreign companies that have expressed interest in
acquiring NSC are the Swiss-based Duferco Group and Paris-
based Pentium Group.  Some local downstream steel industry
players are also keen in the NSC.

The SEC had earlier said it would not approve the proposed
rehabilitation plan unless the shareholders of the cash-
strapped steel maker show proof that they would support it
through a resolution. (Malaysian National News Agency 24-


HONG LEONG ASIA: posts net loss
Hit by lower margins and poor demand in the construction
sector, Hong Leong Asia yesterday reported a net loss of $3
million, compared with a profit of $1.2 million previously,
and said it would remain in the red for the current
financial year. Turnover for the six months dropped 12.5
per cent to $132 million. Losses per share came to 1.6
cents, a fall of 2.2 cents from the previous period. Net
tangible assets dipped to 98 cents from 102 cents.
(Business Times  25-Aug-2000)

NAT STEEL: Industrial biz suffers $11M loss
Industrial group NatSteel has reported a 2.5 percent drop
in its interim net profit to $32.7 million, which was
attributed to weakness in its industrial business which
suffered an $11 million loss because of the severe
competition against its construction products and a sharp
decline in selling prices.

For the six months ended June 30, group turnover rose 6.4
per cent to $688.8 million. NatSteel has three core
businesses grouped under its industrial, electronics and
steel divisions. Both its industrial and steel businesses
have been victims of a weak construction sector in
Singapore although the latter saw an 8 per cent growth on
the back of stronger overseas operations.

The electronics division is run under subsidiaries NatSteel
Electronics (NEL) and NatSteel Broadway (NBL) which are
listed on the Singapore Exchange.  Although this division
contributed only 21 per cent to NatSteel's turnover, it
accounted for 65 per cent of its pre-tax profit. It showed
a 30 per cent growth in turnover and a 5 per cent rise in
pre-tax profit, thanks to better performance from NBL.
However, NEL saw contributions decline although it is the
bigger of the two.

In May, NatSteel proposed a restructuring plan to split
itself into two listed companies -- one for its electronics
business and the other for its industrial and steel
operations.  Despite its claim that the move would improve
shareholders' value, response from investors and analysts
had been lukewarm.

Just a week later, NEL issued a warning on its concern for
its profits because of the component shortages. The news
sent shares of NatSteel and NEL plummeting.  As a result of
the steep drop in share prices, NatSteel was forced to call
off the plan in late June but said it would continue to
study options to restructure itself.

Yesterday, NatSteel president Ang Kong Hua said at a news
conference that these options would involve either
splitting up the company or spinning off its divisions.
He added that there would be "no real deadline" and a new
restructuring plan would depend on "market conditions."

But analysts said that the company would be hard-pressed
for a plan to implement before the end of the year.
On its second half performance, NatSteel said that the
industrial business would continue to suffer losses albeit
at lower levels.  Steel operations were expected to
maintain the same level of performance as last year while
the electronics division would improve.

Based on the first six months, earnings per share (EPS)
fell to 8.18 cents from 8.51 cents assuming its preference
shares were converted. If redeemed, the EPS would fall to
6.97 cents from 7.61 cents.  Net tangible assets per share
dropped to $2.51 from $2.60. An interim dividend of 8 per
cent was declared.  (Straits Times  24-Aug-2000)

PRESSCRETE HOLDINGS: Incurs losses in first half
Presscrete Holdings said lower turnover and slimmer margins
in the six months to June 30 pushed the company into the
red by $462,000, compared with a gain of $205,000
previously. Turnover fell 3.89 per cent to 46.97 million.
Loss per share was 0.76 cents, while net tangible assets
slipped to 14.34 cents from 16.89 cents previously.
(Business Times  25-Aug-2000)


DEUTSCHE BANK: BOT cuts off from money-market
STANDARD CHARTERED BANK: BOT cuts off from money-market
Bank of Thailand has cut off two foreign banks from money-
market transactions for violating capital controls imposed
to guard the baht against speculation. Central bank sources
said regulators had stopped conducting transactions through
the bond repurchase market with Deutsche Bank and Standard
Chartered for several days.

Regulators also warned Bangkok Bank and Citibank that they
faced suspension if they violated the lending restrictions,
adopted in 1997 to help guard the baht against speculation.
Under the guidelines, baht credit facilities extended to
foreign counterparties are capped at 50 million baht per
party, unless backed by documentation that funds will be
used for trade or investment purposes.

"Several banks have violated the 50-million-baht limit,"
said M.R. Chatumongol Sonakul, the central bank governor.
"The transactions have not been significant. But the
central bank will not conduct repurchase transactions with
these banks for 10 days."

He declined to identify the banks involved, but warned
extra sanctions would be imposed for future violations.
On Aug 11, the central bank warned local banks and finance
companies that existing controls remained in force.
The bond repurchase market is a main channel for financial
institutions to manage short-term liquidity.

Banks cut off from repo transactions with the central bank
must turn instead to the more volatile interbank market to
manage their funding needs. Interbank rates over the past
two days have remained steady at 1.75-2%. Yesterday the
bond repurchase market opened with one-day rates of 0.9375%
and closed at 1.0625%.

Local bankers say the penalties were unfair, given the
difficulties in implementing the lending restrictions.
Bangkok Bank was found to have violated the restrictions 86
times over the past few years.

"There was no intention to violate the rules. But the
regulations are impossible to enforce," one Bangkok Bank
executive said. "Each foreign bank might have several
different accounts with several different Thai banks. No
one knows how much total exposure is outstanding to one
party unless the clients are willing to say for

The executive said the latest violation, on July 21,
involved a current account of a foreign firm. The client
had just 923 baht in the account, which had been dormant
for several years. Bangkok Bank imposed a maintenance fee
on the account of 1,000 baht, leading to an overdraft of 77
baht-classified as a credit facility and pushing the bank
over the limit.

The executive said Bangkok Bank executives had met senior
central bankers, including deputy governor Pakorn Malakul
Na Ayudhya and assistant governor Chettavee Charoenpitaks.
In June, the Thai Bankers' Association sought a review of
the controls, saying existing conditions jeopardised
development of the payments system.

But the central bank, wary of the weakening baht, told the
association the rules would not be changed. Mr Chettavee
confirmed yesterday that the central bank had ceased
transactions with "several banks" for violations discovered
this month. The bans are a short-term inconvenience for the
banks, as liquidity in the interbank market remains

"The biggest damage is in terms of image. No one wants to
run afoul of the regulators," said one treasuries dealer.
"Who knows what else the central bank will do? They might
close off the loan window, for instance. While that's not
really important now, in a crisis, when the market is
tight, you need access to the central bank facilities."
(Bangkok Post  25-Aug-2000)

SAHAPATANAPIBUL GROUP: In cost-reduction mode
Sahapatanapibul Group is continuing to consolidate its
subsidiaries, by merging and closing some companies it
considers under-performers.

The group has already reduced its company numbers from 300
to 200, according to ICC International president Boonkiet
Chokwatana, one of the group's major companies.  He said a
number of the group's subsidiaries, predominantly non-
listed, had proved to be under-performers. And he said the
group did not have a sufficiently large management team to
oversee those companies, so, company numbers would be
further reduced.

He said the companies listed on the Stock Exchange of
Thailand mostly had growth potential, and they would be
difficult to merge or consolidate.  Boonkiet said it was
becoming more and more frustrating for listed companies to
follow the SET's regulations.

For example, appraisal of deteriorate assets had created
confusion, and frustrated listed companies. He said he did
not think the authorities realised the impacts of such
measures on locally listed companies.

"To be a listed company at the present, provides less and
less advantages," he said. "Listed companies seem to be
those who are committing crimes, because they are closely
traced and regulated. This is only to protect retail
investors," said Boonkiet.

He said the regulations that required release of extremely
detailed information should not be applied to all
companies, there should be some discrimination between
"good" and "bad" companies.  Meanwhile, Boonkiet said the
company's sales growth this year would increase about 12 to
15 per cent, compared with last year's Bt7.18 billion of
sales volume.

By the end of this year's first half, the company had
recorded total sales of Bt3.9 billion.  He said the higher
sales volume could mainly be attributed to selected
products and an ongoing marketing campaign. (The Nation

Seamico Securities recorded a net loss of Bt64.23 million
in the second quarter of 2000, while results for the first
half of the year were a total net loss of Bt51.30 million.

The company said attributed the first-half loss to a
decrease in revenue from its securities business. Revenues
were Bt113.7 million less than in the same period last
year. The company also saw a Bt81.1 million increase in
expenses compared to last year. Revenues from other
businesses also fell Bt7.2 million and net profit from
subsidiaries fell by Bt3.3 million.

SIAM CITY BANK: Authorities' delay worsening condition
Banking authorities' delay in acting on ailing Siam City
Bank (SCIB) is contributing further to its financial
deterioration, say analysts.

Ever since nationalising the bank in January 1998, the
authorities have dwelt on the optimistic notion that they
would be able to find a buyer for the bad-debt-laden bank.
Unlike Bangkok Metropolitan Bank (BMB), which was
nationalised at the same time, SCIB has a considerable
amount of assets. And the larger a bank is, the more
difficult it is to sell out at a reasonable price.

BMB, with assets of about Bt160 billion as of July, has
attracted interest from UK-based Hong Kong & Shanghai
Banking Corporation.  SCIB, with Bt255.8 billion in assets,
has failed to attract any serious potential buyers.
Only the US-based Newbridge Capital Fund, which is a fund-
management company, has expressed a serious interest in

However, the authorities found Newbridge's offer
unacceptably low.  Besides, Newbridge is not a bank so it
is unlikely to be able to help develop the Thai banking
industry.  GE Capital, another potential investor, seems
interested only in buying the bank's assets to make a quick
profit, such as when it bought the assets of 56 defunct
finance companies from the Financial Sector Restructuring

According to the original plan, the deadline for SCIB's
privatisation was set for last year.  The central bank,
however, insisted on several occasions that the best
solution for SCIB would be to sell it to foreign investors.
As the bank's licence seemed less and less attractive to
investors, dragging out the decision on SCIB's
privatisation also proved costly to the authorities.

A central bank source said SCIB's non-performing loans have
now reached as much as Bt170 billion, while classified
loans were reported at Bt204 billion.  According to central
bank governor MR Chatu Mongol Sonakul, the BOT would have
to inject an additional Bt90 billion in capital to
compensate for the potential damage of SCIB.

A few months ago, with no solution in sight and the BOT
pondering various ways to solve the SCIB's problems, the
bank was facing a deposit run of more than Bt10 billion.
SCIB's management says Tuesday's decision to separate the
good and bad loans should have been taken a long time ago.

"It's difficult to solve because they [the authorities] did
not tell us what exactly the solution would be," a high-
ranking executive from SCIB said.  "In the earlier stages,
there was only one way for SCIB, which was to sell to an
investor. But the truth is that the larger the assets, the
harder it is for us to sell. Those who want to invest would
like to pay as little as possible, while we are trying to
curb our NPLs. It's quite difficult."

The executive said it is becoming even more difficult the
longer authorities continue to drag their feet on whether
to sell.

"They should have listened to us, but they didn't. We have
been suggesting the asset separation since last year. Now,
it's too late," the executive said.

The BOT's final decision to separate the bank's good and
bad assets is believed to be the best way, as the
authorities are also facing social pressure against selling
Thai banks at too cheap a price.  Some market watchers
believe the authorities should apply similar measures to
the giant state-owned Krung Thai Bank, since that bank's
financial position seems destined to deteriorate before it
is privatised in the future.

Thai authorities stated earlier that they prefer to have
only one state-owned bank, noting that BankThai is also
state-owned. (The Nation  24-Aug-2000)

S U B S C R I P T I O N  I N F O R M A T I O N

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