Thailand: Financial Sector Assessment Program-Detailed Assessment of Observance-Basel Core Principles For Effective Banking Supervision

IMF Staff Country Reports, October 24, 2019

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Canonical URL: Thailand: Financial Sector Assessment Program-Detailed Assessment of Observance-Basel Core Principles For Effective Banking Supervision

The Detailed Assessment of Observance on the Basel Core Principles (BCP) for effective banking supervision on Thailand highlights significant enhancements to the legal framework and the supervisory process since the last BCP review, resulting in high compliance.
The commercial banking sector appears to be sound and stable with a diversified lending profile and a steady source of funding.
The involvement of other ministerial authorities in Specialized Financial Institutions supervision may affect standard-setting processes and the mindset of key decision makers for commercial banks when trying to level regulatory standards.
Notifications and examination manuals increasingly focus on analysis of qualitative factors such as governance, risk management and risk appetite statements to determine the bank’s composite rating.
The supervisory framework and practices provide the foundation for the continued development of risk-based supervision.

Supervisory focus:
- Increasing emphasis on qualitative analysis: governance, risk management, risk appetite statements.
- Use of notifications and examination manuals to inform composite ratings.
Sector soundness:
- Commercial banks characterized by diversified lending profiles and steady funding sources.
Potential frictions:
- Multiple ministerial authorities involved in supervision of Specialized Financial Institutions, which may affect standard-setting and decision-maker mindset in commercial banks.

Increase efficiency of enforcement actions by aligning Financial Institutions Business Act requirements and Bank of Thailand internal practices.
Continue development of risk-based supervision using enhanced supervisory manuals and notifications that emphasize qualitative assessments (governance, risk management, risk appetite).

Subject: Banking, Commercial banks, Financial institutions, Financial regulation and supervision, Financial sector policy and analysis, International trade, Market risk, Operational risk, Stress testing, Trade balance
Keywords: Asia and Pacific, BOT notification No. FPG, BOT supervisor, business strategy, Commercial banks, CR, credit risk, Global, ISCR, Market risk, Operational risk, parent company, risk management, risk profile, senior management, Stress testing, Trade balance