Problems With Property Loans

Take Thailand first. In an earlier article (World Money, March 17, 1997), I had referred to the problems of Finance One PCL, a leading Thai finance company with large exposure to the property sector. Finance One had a run on its deposits and had to quickly merge with a commercial bank. With confidence shaken, equity prices of banks and finance companies have fallen sharply, and 10 finance companies have had to be provided liquidity support by the central bank.

The governor wants as many of the (91) finance companies as possible to disappear through mergers. He is also holding a carrot in front of the finance companies to hasten the process