The baht collapse in 1997 changed all that. Like every other bank in the country, Thai Farmers was devastated. But unlike his counterparts, Banthoon saw the crisis as an opportunity to push through radical changes. He launched an ambitious balance-sheet cleanup, sold 49% of the bank's assets to foreign investors, and set about Westernizing the company culture. Last year, as a result of the restructuring, Thai Farmers reported a $29 million profit, a major reversal from its $970 million loss in 1998.
Yet the bank isn't out of danger. With an ailing Thai economy and increasing foreign competition, growth is again under threat. Nonperforming loans could rise again industrywide, and margins are in for a squeeze because Thailand's new central banker is urging lenders to raise deposit rates while leaving lending rates unchanged. "What Thai Farmers Bank can do is limited," says Bangkok-based J.P. Morgan Chase & Co. bank analyst Pornchai Prasertsintanah. "It's a good bank in a bad environment."
Still, Thai Farmers has managed to push through reforms in a nation that balks at Western-style change. "I was accused of being un-Thai," Banthoon, 48, recalls from his 32nd-floor office overlooking the Chao Praya River. "But the first thing to attack [was] a very old cronyism and nepotism that is normal in Thai organizations." He began by calling in the consultants. "We brought in everybody--McKinsey, Andersen Consulting, Oliver Wyman, Booz Allen, Goldman Sachs, you name it," he says. Banthoon recruited expats to run human resources, retail, and corporate development. He put three foreign directors on the board. "In a country where conformity is revered," says SG Securities Asia analyst Andrew Stotz, "this guy's breaking the mold."E-GIRLS. Banthoon was also the first Thai banker to link bonuses to overall performance. It wasn't an easy sell, as former Citibank exec William Fontana discovered when he asked staff to assess each other's performance. Typically, they would nod, "which means they heard me," says Fontana, "not that they agree." But those who don't "accept the inevitability of being measured," as Banthoon puts it, may not last. Between 1998 and 2001, the bank spent $42 million on buyouts, reducing the head count by a fifth, to 11,500.
The next task was to prepare for foreign competition. Citibank and Standard Chartered Bank are gearing up to take advantage of World Trade Organization liberalization in 2003. To start with, Thai Farmers needed a hip new image. Enter the "e-girls"--eight leggy women who promote the bank's electronic products, phone banking, and cash cards. Since the campaign began, new accounts have grown by 100,000 a month. To expand its roster of corporate clients, the bank last month launched an online service that offers everything from cash management to foreign-exchange trading.
Yet despite all the hard work, Thai Farmers is a victim of its own virtue. This year, its share price has trailed those of other bank stocks. Why? Mostly because investors are buying the shares of other banks, hoping the government will absorb their bad loans into a national asset-management corporation that Prime Minister Thaksin Shinawatra's Cabinet hopes to establish by July. Thai Farmers doesn't stand to benefit because it spun off its bad assets 20 months ago.
Banthoon agrees he's powerless to move the share price. "It's a function of the country as a whole," he says. "Unless there is a new paradigm, I don't think the share price is going anywhere." But if a new model for modern corporate governance emerges, Banthoon can take credit for helping create it. By Frederik Balfour in Bangkok