Thailand unlikely to bank on sub debt

On August 23, the Bank of Thailand (BoT) amended its bank capital guidelines, giving domestic banks greater flexibility in being able to meet year end capital adequacy ratios of 8.5%. A new category of capital, upper tier 2 debt, was allowed for the first time, in order to enable the sector to boost weakened capital bases. Previously, although tier 2 debt could theoretically equal tier 1 debt, only lower tier 2 debt was allowed. Since this could not exceed more than 50% of tier 1 debt, the 100% figure was fairly meaningless.