Parinya Patanaphakdee, senior executive vice president and head of KTB’s credit-restructuring and asset-management group, said yesterday that the bank’s proportion of SSI’s NPL was Bt10 billion, which will be eliminated if the court approves the steelmaker’s rehab plan.

KTB has gross NPLs of Bt98.42 billion, representing 4.24 per cent of total outstanding loans. Once SSI’s debt is eliminated from that figure, KTB’s gross NPL rate could improve to between 3.7 and 3.8 per cent.

Three lenders have reserved provisions for SSI debt totalling Bt22 billion.

Parinya said SSI debt accounted for 10 per cent of total NPLs in the Thai banking industry, which has had a meaningful impact on the sector. In the third quarter of this year, total NPLs in the banking industry were Bt390 billion out of total lending of Bt13 trillion.

The decline in NPLs from the SSI rehab will have a positive effect on KTB’s coverage ratio, but it will maintain a high reserve during the final quarter in order to increase its coverage ratio close to that of top-tier banks.

The coverage ratio at KTB as at the end of this year should increase to 118 per cent from 104 per cent as of the third quarter.

Parinya said SSI in Thailand had sufficient cash flow to run its operations because of the recovery of the price of steel and the bright prospects for demand from upcoming government infrastructure projects and private investment.

If the government can prevent steel dumping from China, SSI’s prospects will be even brighter.

Under liquidation

Meanwhile, SSI’s upstream plant in Britain is in an ongoing liquidation process. The Thai lenders have written off the debt of SSI in the UK.

Accounts receivable officers in Britain are seeking investors to buy the assets of SSI in that country, the most valuable of which is likely to be a port.

“We have followed the performance of SSI in Thailand, whose operating account is in KTB, meaning we can track the cash flows. However, we will not inject new lending until the steelmaker can control its business well,” Parinya said.

He said that if the court agrees with the SSI plan, it would be the first time a corporate borrower could exit from its NPLs only one year after submitting a rehabilitation plan.