Asset management firms to absorb bigger slice of NPLs

The Bank of Thailand expects asset management companies (AMCs) to absorb 20% of nonperforming loans (NPLs) to help improve bad debt management in the banking industry.

- SOMRUEDI BANCHONGDUANG

Speaking at the BAM Symposium hosted yesterday by Bangkok Commercial Asset Management Plc (BAM), the country's largest AMC, central bank governor Vitai Ratanakorn said Thailand has around 90 AMCs that collectively absorb about 10% of the country's total bad debt, down from 20% in past years.

"We expect the NPL absorption ratio to return to 20%. Ideally, it should rise even higher — to 25%, 30% or even 35%," said Mr Vitai.

He said the central bank is considering extending the application period for financial institutions to establish joint venture AMCs (JV-AMCs), after the previous deadline expired at the end of 2024. The extension is expected to be announced later this week, said Mr Vitai.

There are three JV-AMCs in operation: JK AMC, Ari AMC and Arun AMC. JK AMC is a partnership between Kasikornbank (KBank) and JMT Network Services, while Arun AMC is a collaboration between KBank and BAM. Ari AMC is a joint venture between BAM and Government Savings Bank.