BAM now wants to buy NPLs from banks

News

After earning Bt1.83 billion in net profit in 2004 from successfully restructuring non-performing loans, Bangkok Commercial Asset Management (BAM) is now offering to take on such loans from banks.

Bunyong Visatemongkolchai, president of the state-owned company, said yesterday that BAM could help achieve the central bank’s target for reducing the number of non performing loans (NPLs) if banks sold their distressed loans to his company to manage them.

The Bank of Thailand (BOT) has targeted reducing the level of NPLs in the banking system to 5 per cent of total loans by the end of this year, and to 2 per cent next year.

Currently, the country’s NPLs total around Bt600 billion, accounting for 11 per cent of total loans.

“If the banks manage bad debts by themselves, it will take more time than the BOT has targeted. Therefore, they should sell them off to asset-management companies as a shortcut to reach the BOT’s target. As one of the asset-management companies, BAM has the potential to manage bad debts worth Bt200 billion-Bt300 billion over the next two years,” Bunyong said.

He said that BAM wanted to buy at least Bt50-billion worth of NPLs and non-performing assets (NPAs) per year from financial institutions.

Selling off NPAs is expected to the main strategy of banks and asset-management firms to reduce their bad debts this year.

“The stiff competition on NPA sales from both banks and asset-management companies is expected to continue at the same high level this year. However, it will provide a goodopportunity for the buyers, particularly for retail home buyers.

With high competition to reduce NPAs, the prices of second-hand homes must be forced lower,” Bunyong said.

The country’s total NPAs

currently stand at around Bt257 billion, including Bt180 billion under the banking system, Bt40 billion under the Thai Asset Management Corporation (TAMC), Bt25 billion under the Asset Management Corporation (AMC) and Bt12 billion under BAM.

Bunyong said BAM was currently studying a move to list on the Stock Exchange of Thailand (SET) and expected to reach a conclusion by mid-April, after which it would hand its proposal to the BOT. The listing is expected to be completed within the next year.

The company currently qualifies for listing under SET regulations.

The BAM president said that being listed on the exchange would bring three additional benefits: more channels to raise funds, an opportunity to show the company’s professionalism in business management and the chance to find more business opportunities, as BAM plans to expand into property management in the future.

Published on March 01, 2005

Somruedi Banchongduang

The Nation

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