Thailand's only licensed margin loan provider near bankruptcy
Ever
hear of TFSC Securities in Thailand? TFSC Securities is the only firm licensed in Thailand to provide financing for securities purchases (a margin loan, purchasing on margin). The firm was founded back in 1996 and the last time the company made the news was back in 2004 when it was active in offering employees state enterprises financing to make purchases in employee stock option programmes (ESOP) (Bangkok Post, B3, 09-04-04).
The securities financing provided by TFSC includes both margin loan refinancing and securities repurchase agreements. Unlike stock brokerages which depend on commissions for revenues TFSC "had only two sources of revenue: interest earnings from margin loans and returns from its investments." Most stock brokerages have "suffered relatively little from the crisis overall."
Many brokers now offer margin loans to investors so TSFC is not the only firm providing this function. Because it is not essential anymore, TSFC's days may be numbered.
Vocabulary:
securities - financial assets for investors: stock shares, bonds, derivatives สินทรัพย์ เช่น หุ้น พันธบัตร
a margin loan - a loan for part of the purchase price of stock shares
purchasing on margin - borrowing money to purchase stock shares
securities repurchase agreements, securities lending trades - to temporarily obtain securities for a purpose such as: 1. covering short positions, or 2. for use in complex financial structures.
a broker, a stock brokerage - a firm that sells and buys stocks for investors and offers financial advice โบร๊คเกอร์
a commission - money received for selling something for another person (a percentage of the purchase price) ค่าคอมมิชชั่น เงินส่วนแบ่ง
days may be numbered - may not have long to live เหลือเวลาอีกไม่นาน ใกล้จะล้มแล้ว
securities - financial assets for investors: stock shares, bonds, derivatives สินทรัพย์ เช่น หุ้น พันธบัตร
a margin loan - a loan for part of the purchase price of stock shares
purchasing on margin - borrowing money to purchase stock shares
securities repurchase agreements, securities lending trades - to temporarily obtain securities for a purpose such as: 1. covering short positions, or 2. for use in complex financial structures.
a broker, a stock brokerage - a firm that sells and buys stocks for investors and offers financial advice โบร๊คเกอร์
a commission - money received for selling something for another person (a percentage of the purchase price) ค่าคอมมิชชั่น เงินส่วนแบ่ง
days may be numbered - may not have long to live เหลือเวลาอีกไม่นาน ใกล้จะล้มแล้ว
TFSC lost large amounts of money when stock share prices collapsed on the on the Stock Exchange of Thailand in recent weeks:
The
decline has affected not only TSFC's investment portfolio
in stocks and unit trusts,
but has also cut into
the value of collateral pledged against its margin loans,
forcing it to set aside
provisions against losses.
Tris Rating on Friday cut its rating for TSFC from A to BBB- and placed the company on a negative watch due to deteriorating fundamentals. Unrealised losses on securities investment totalled 525 million baht as of June, and Tris expects the company to slide into a loss for the year due to higher provisioning requirements and further losses on its securities portfolio.
The Securities and Exchange Commission [SEC] said TSFC shareholders are currently in talks about a possible recapitalisation. The TSFC is 10.73% owned by the ministry, 37.5% by commercial banks and 16.42% by 19 brokers. Other shareholders include the SET, two finance companies and a number of finance companies closed since the 1997 crisis...
Areepong Bhoocha-oom, the director-general of the State Enterprise Policy Office, said the ministry was awaiting a restructuring plan from the TSFC before deciding whether to participate in a recapitalisation...
He said a number of options were available, including a rights issue to existing shareholders, a placement with a new partner or the issue of preferred shares to raise capital.
Tris Rating on Friday cut its rating for TSFC from A to BBB- and placed the company on a negative watch due to deteriorating fundamentals. Unrealised losses on securities investment totalled 525 million baht as of June, and Tris expects the company to slide into a loss for the year due to higher provisioning requirements and further losses on its securities portfolio.
The Securities and Exchange Commission [SEC] said TSFC shareholders are currently in talks about a possible recapitalisation. The TSFC is 10.73% owned by the ministry, 37.5% by commercial banks and 16.42% by 19 brokers. Other shareholders include the SET, two finance companies and a number of finance companies closed since the 1997 crisis...
Areepong Bhoocha-oom, the director-general of the State Enterprise Policy Office, said the ministry was awaiting a restructuring plan from the TSFC before deciding whether to participate in a recapitalisation...
He said a number of options were available, including a rights issue to existing shareholders, a placement with a new partner or the issue of preferred shares to raise capital.
Vocabulary:
an investment portfolio -the collection investments belonging to a person or company เงินทุน
a unit trust - an open-ended investment fund with a value that directly reflects the value of the underlying assets, divided into units which vary in price with the value of assets in the fund, open-ended means the fund can expand and contract, when new money is invested new units are created that match the current unit buying price การลงทุนร่วม
collateral - property or some other valuable asset that you promise to give to a lender if you cannot pay back money that you borrowed ทรัพย์สินผูกพันตนเพื่อเอาไว้หักชำระหนี้หากไม่ชำระหนี้นั้น
pledge - promise สัญญา
cut into the value of collateral pledged against its margin loans - นำสินทรัพย์มาหักชำระหนี้
set aside - keep for a special use in the future ที่กันไว้เพื่ออนาคต
provisions against Y - money kept in case bad event Y happens เงินสำรอง
set aside provisions against losses - keep money to use if their losses in the future จัดสรรเงินสำรองไว้
higher provisioning requirements - required to set aside more money in case of an emergency สัญญาที่ระบุให้เงินประกันหุ้นในราคาสูง
a rating, a credit rating - a number assigned to a company or person that measures the likelihood that they will not pay back money they borrowed การจัดอันดับ
placed the company on negative watch - start watching the company closely for events that might have a bad effect on the company ทำให้บริษัทมีภาพรวมที่เป็นลบ ทำให้เครดิตบริษัทเสียไป
fundamentals - the underlying health of a company or economy (that will determine whether it is profitable and survives in the long-run) ที่สำคัญ ที่เป็นตัวกำหนดความมั่นคงของบริษัท
deteriorating fundamentals - when the underlying health of a company gets worse ทำให้เสียความมั่นคง
unrealised losses - losses that will occur in the future (have not occured yet but will occur) ผลเสียที่แอบแฝง ผลเสียที่อาจคาดไม่ถึง
a securities portfolio - the collection of securities that an investor owns
Securities and Exchange Commission (SEC) - the government agency in charge of monitoring securities markets for wrongdoing
recapitalisation - increasing the owner's equity of a business, the contribution of owners to the funding and financing of the business
a state enterprise - a company owned by the government
a restructuring plan - a plan for reorganizing a failing business so it can continue to operate
a rights issue, a rights issue to existing shareholders - when new shares are offered for sale to existing shareholders usually at a lower price than the current market price
a placement, a placing - when new stock shares in a company are made available for sale to people or organisations
common shares - stock shares in a company providing a regular payment and return on investment (dividend) that is a percentage of the company's profit and the right to vote for board members หุ้นสามัญ
preferred shares - stock shares in a company that provide regular fixed payments (dividends) without voting rights but paid before common shares if there is bankruptcy หุ้นบุริมสิทธิ
an issue - offering stock shares or bonds for sale สั่งขายหุ้น
an issue of preferred shares - offering preferred shares for sale สั่งขายหุ้นบุริมสิทธิ
raise capital - raise new investment money in a business by owners, increase equity of company หาเงินมาลงทุนเพิ่ม
(Source: Bangkok Post, business, Finance Ministry may exit TSFC, NUNTAWUN POLKUAMDEE and WICHIT CHANTANUSORNSIRI, 10-11-08, link)
