SET-listed Bangkok Commercial Asset Management (BAM) is in talks with seven financial institutions to be potential partners and set up joint venture asset management companies (JV AMCs) under the Bank of Thailand's initiative to manage non-performing loans (NPLs) in the banking industry.
The seven potential partners comprise six commercial banks and one AMC.
BAM is in the process of applying for a JV AMC business licence from the central bank. It is awaiting the readiness of potential partners, said BAM chief executive Bundit Anantamongkol.
The company hopes to see progress on a first deal in the first half of this year, said Mr Bundit.
He said BAM is ready to manage all types of bad assets under a JV AMC, covering retail and business loans, secured and unsecured loans.
The price of bad asset purchases will depend on the asset quality, said Mr Bundit.
BAM may possibly set up several JV AMCs and each JV AMC could have more than two partners, he said.
The JV AMCs should help BAM save capital on the purchase of NPLs from financial institutions under the concept of capital and resource sharing. BAM forecasts banks will sell more bad assets later this year through next year, in line with the ongoing expiration of the central bank's debt relief measures.
"We forecast bad asset sales from banks next year will be around 200-300 billion baht, compared with around 100 billion per year under normal economic circumstances," said Mr Bundit.
According to central bank regulations, the maximum period for bad asset management under a JV AMC is 15 years. BAM expects to manage bad assets via a JV AMC for around 10 years on average, in accordance with asset quality during the Covid-19 crisis.
Normally the company takes around 7-8 years to restructure NPLs in its portfolio, he said.
BAM chief financial officer Suntis Watanakul said the company estimates the purchase of bad assets -- both NPLs and non-performing assets -- from financial institutions worth 9 billion baht this year. However, the actual amount could exceed the projection, he said, as on average the company purchases bad assets worth 12 billion baht per year.
Since the beginning of this year, there have been around 10 billion baht in sales of bad assets from financial institutions, the same level as recorded prior to the pandemic. NPLs in the banking sector are expected to increase from late this year through next year.
Mr Suntis said it is too early to forecast the company's purchase level of bad assets for next year because it depends on banks' strategies for NPL management.
Banks can either be directly responsible for managing bad debts themselves, sell them to AMCs, or set up JV AMCs, he said.
BAM has prepared for higher levels of bad asset purchases via JV AMCs, said Mr Suntis.
The company's shareholders approved bond issuance worth 25 billion baht in total during 2022-2023 and BAM is considering suitable timing for the bond offering.
BAM also collaborated with Thailand Post on sharing resources for bad asset management. BAM plans to utilise around 10,000 branches of Thailand Post's network and around 20,000 employees to update bad asset information countrywide.
