The Bank of Thailand (BoT) has outlined requirements for the formation of a joint venture asset management company (JV AMC) to assist financial institutions in managing long-term bad debts over the long term.
According to Senior Director of the Bank of Thailand Suwannee Jatsadasak, the impact of the pandemic is expected to be long-term and likely differ from other economic disasters, like the 1997 Asian financial collapse. While existing asset management companies (AMCs) such as Bangkok Commercial Asset Management Company Plc and Sukhumvit Asset Management Company (SAM) play important roles in the country’s bad asset management, both have capital constraints when it comes to purchasing distressed debt from financial institutions.
The BoT Senior Director said that a JV AMC will give banks more flexibility in managing bad debts, helping both individual and commercial borrowers in the longer term. The two major shareholders, a financial institution and a JV partner, will hold equal shares to balance controlling power in the JV AMC.
The requirements for establishing a JV AMC were effective on Thursday, and financial institutions can apply for a license for the next three years. The license will be valid for 15 years.
Meanwhile, SAM president Tharatporn Techakitkachorn stated that the company is in discussions with 2-3 possible business partners to establish JV AMCs, hinting that a JV AMC license could be applied by the end of this year. (NNT)