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FF Thailand assessment indicates competition to improve amongst banks

Wednesday, January 20, 2021

This is the third year that FF Thailand have published policy assessments, and assessment scores indicate that most banks are engaged in a healthy competition to disclose more information to the public. "We found that some bank’s scores improved markedly from 2019, some banks’ scores remained constant, and some banks’ scores slightly declined," says Sarinee Achavanuntakul, adding "This is the first year that we use the 2020 version of Fair Finance Guide methodology, which adds a new theme “health,” bringing the total number of scored themes and internal operations to 13: climate change, anti-corruption, gender equality, health, human rights, labor rights, nature, tax, arms, consumer protection, financial inclusion, remuneration, and transparency."  

This is also the first year that the team assessed policies of 4 major specialized financial institutions. Publicly disclosed information was used (as of 30 September 2020) followed by an 8-week discussion period with banks, before finalizing the results.

The total scores this year for 8 commercial banks are as follows:

  1. TMB Bank: 38.9% 
  2. Krung Thai Bank: 22.4%
  3. Bangkok Bank: 21.8%
  4. Siam Commercial Bank: 21.2%
  5. Kasikornbank: 20.6%
  6. Bank of Ayudhya: 16.9%
  7. Kiatnakin Phatra Bank: 16.1%
  8. TISCO Bank: 15.9%

As for 4 state-owned specialized financial institutions, their first-year scores are as follows:

  1. Bank for Agriculture and Agriculture Co-operatives: 22.1%
  2. Government Savings Bank: 15.4%
  3. Government Housing Bank:11.1%
  4. SME Bank: 9.0%

Overall, 6 financial institutions scored higher than group average of 19.3%, reflecting that half of all financial institutions scored showed a commitment to sustainability that is above and beyond legal obligations.

TMB Bank retains the number 1 spot this year in the ranking, with a leap to 38.9% of total score. Sarinee explains this jump saying “TMB Bank this year scored points from being a clear leader in announcing credit policies and exclusion lists in line with Fair Finance expectations, such as pleding not to give financial support to any business involved in primary tropical rainforest, coal-fired power plants, and coal mines. The bank also announced that it will limit exposure to the upstream oil and gas industry to no more than 10% of total loans. We are confident that, in the near future, other banks will catch up in terms of issuing clear credit policies and exclusion list that affirm their commitment to sustainability.”

Sarinee adds that “the 2020 results show a healthy competition among half the banks; many banks began to give more attention to human rights and labor rights. Bank for Agriculture and Agriculture Co-operatives and Government Savings Banks, two unlisted state-owned specialized financial institutions whose policies we only began assessing this year, show several favorable policies that are in line with listed private banks, while Government Housing Bank and SME Bank have much more room to improve. In addition, all banks continue to improve their consumer protection and financial inclusion policies and practices.”

In addition to launching the 2020 policy assessment results, Fair Finance Thailand also hosted an online discussion titled “Banking for Better: from crisis to sustainability.” Speakers include representatives from TMB and Krung Thai Bank, which ranked number 1 and 2 respectively in this year’s assessment, representatives from Foundation for Consumers and Ecological Alert and Recovery – Thailand (EARTH), two members of Fair Finance Thailand coalition. The speakers exchanged views on sustainability policy priorities for banks, household debt crisis during COVID-19 pandemic, and the potential role of banks in combating severe PM2.5 air pollution and waste overflow in Thailand.

Full assessment results and attendant report (in Thai) can be downloaded from Fair Finance Thailand website: www.fairfinancethailand.org

Fair Finance Thailand was established in 2018 by research company, Sal Forest Co. Ltd., and four civil society organizations: International Rivers, Foundation for Consumers, EnLaw Foundation, and Ecological Alert and Recovery (EARTH). All coalition members share an interest in monitoring impacts and challenges of the banking sector, especially from the view of social and environmental risks, as well as consumer expectations. The goal of this coalition is to encourage Thai banks to adopt genuine “sustainable banking” practices that are in line with United Nations’ Sustainable Development Goals (SDGs) and United Nations Guiding Principles on Business and Human Rights (UNGP). 

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