{
  "title": "Thailand: Financial Sector Assessment Program-Technical Note-Risk Assessment",
  "publication": "IMF Staff Country Reports, October 24, 2019",
  "sourceUrl": "https://www.imf.org/en/publications/cr/issues/2019/10/24/thailand-financial-sector-assessment-program-technical-note-risk-assessment-48748",
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  "summary": "This technical note on the risk assessment for Thailand discusses that the Thai banking system shows a substantial resilience to severe shocks. The solvency stress tests indicate that the largest banks can withstand an adverse scenario broadly as severe as the Asian financial crisis.",
  "sections": [
    {
      "heading": "Summary findings",
      "content": "- The Thai banking system shows a substantial resilience to severe shocks.\n- The solvency stress tests indicate that the largest banks can withstand an adverse scenario broadly as severe as the Asian financial crisis.\n- While three banks would deplete their capital conservation buffer (CCB) under the adverse scenario, recapitalization needs would be minimal.\n- A battery of complementary sensitivity stress tests confirmed the overall picture of a resilient banking system.\n- No particular vulnerability emerged from:\n  - the analysis of the bond portfolio to an increase in government and corporate spreads;\n  - exposure to foreign exchange risk;\n  - concentration risk in the loan portfolio, with the possible exception of one entity with a particular concentration on single-name exposures."
    },
    {
      "heading": "Stress test results (solvency)",
      "content": "- Largest banks: able to withstand an adverse scenario broadly as severe as the Asian financial crisis.\n- Three banks: would deplete their capital conservation buffer (CCB) under the adverse scenario.\n- Recapitalization needs: would be minimal."
    },
    {
      "heading": "Sensitivity analyses",
      "content": "- A battery of complementary sensitivity stress tests was used to cover in more detail certain risk factors.\n- Results:\n  - Bond portfolio: no particular vulnerability to an increase in government and corporate spreads.\n  - Foreign exchange risk: no particular vulnerability identified.\n  - Loan portfolio concentration: generally no particular vulnerability, except one entity with a concentration on single-name exposures."
    },
    {
      "heading": "Liquidity stress test on investment funds (IFs)",
      "content": "- Investment funds (IFs): would be able to withstand a severe redemption shock.\n- Impact: the impact on the banks and the bond market would be limited.\n\n---\n\n Content in this bundle\n\n- 1thaea2019003\n  - 1thaea2019003 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 1thaea2019003 (PDF){rel=\"external\" type=\"application/pdf\"}"
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    "Published: October 24, 2019",
    "Series: IMF Staff Country Reports",
    "DOI: https://doi.org/10.5089/9781513517544.002",
    "The Thai banking system shows a substantial resilience to severe shocks.",
    "The solvency stress tests indicate that the largest banks can withstand an adverse scenario broadly as severe as the Asian financial crisis.",
    "While three banks would deplete their capital conservation buffer (CCB) under the adverse scenario, recapitalization needs would be minimal.",
    "A battery of complementary sensitivity stress tests confirmed the overall picture of a resilient banking system.",
    "No particular vulnerability emerged from:",
    "Largest banks: able to withstand an adverse scenario broadly as severe as the Asian financial crisis.",
    "Three banks: would deplete their capital conservation buffer (CCB) under the adverse scenario.",
    "Recapitalization needs: would be minimal.",
    "A battery of complementary sensitivity stress tests was used to cover in more detail certain risk factors.",
    "Results:",
    "Investment funds (IFs): would be able to withstand a severe redemption shock.",
    "Impact: the impact on the banks and the bond market would be limited.",
    "**1thaea2019003**"
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