The business rehabilitation plan of the Small and Medium Enterprise Development Bank of Thailand (SME Bank) is unlikely to achieve its target due to the disagreement between management and the board over senior management restructuring, said president Manoonrat Lertkomolsuk.
He said some bank staff wore black yesterday in protest against the board of directors, which has put on hold his senior management restructuring plan.
Mr Manoonrat said he proposed his plan to reshuffle eight senior executives recently to the board, but the members disagreed and put the plan on hold.
However, chairman Naris Chaiyasoot said the board decided to shelve the plan because it was too soon for Mr Manoonrat, who took up the position only two months ago, to make such a big change at the senior level.
Mr Naris pointed out the board previously approved his plan to restructure middle management, but Mr Manoonrat has not fully executed it.
Mr Manoonrat said the senior management reshuffle is crucial for the bank's recovery, as it will not be able to cut non-performing loans without it.
For the first eight months of this year, the bank extended a mere 9 billion baht, far below the 21-billion-baht target.
This means the full-year target of 100 billion baht is almost certain to be out of reach, he said.
"The first thing we have to do is 'put the right man in the right job'. I decided to reshuffle eight senior executives, but the board put my plan on hold, resulting in slow expansion of new loans," said Mr Manoonrat.
He said the reshuffle was carefully prepared, taking into account strengths and weaknesses as well as performances in key areas by the executives.
"The reshuffle is meant to match their key expertise with the jobs. That's all," said Mr Manoonrat.
In the absence of change, it is difficult for SME Bank to achieve the targets, especially non-performing loan (NPL) reduction.
Its NPLs now stand at 32 billion baht or 32% of total outstanding loans compared with the 29% target to 28 billion baht by year-end.
The loan expansion is part of the strategy to bring down the NPLs.
Furthermore, he believes some 4 billion baht of the soft loans lent to flood victims in 2011 under the government's directives and due to be paid off this year will likely turn sour and be classified as NPLs.
Meanwhile, one of the bank's staff who joined the protest yesterday said there are huge internal conflicts among top executives and board members.
Some loans were also approved illegitimately in the past, resulting in high NPLs currently.
A staff member who asked not to be named said the president is in the hot seat, as he realises he is at high risk of being portrayed as a scapegoat for any new loan approvals.
The state-owned bank entered rehabilitation led by a committee chaired by Pichai Chunhavachira earlier this year, with the aim of reshaping its operations and reducing NPLs.
SME Bank is being probed for allegedly falsifying accounts, a possible cause of the high NPL level.
It is also under investigation over dubious loan approvals under the management of former president Soros Sakornvisava.
About the author
- Writer: Wichit Chantanusornsiri
Position: Business Reporter