Expansion of Asset Management Companies in Thailand
The Bank of Thailand has taken a significant step by allowing non-bank institutions to establish joint-venture asset management companies (JV-AMCs). This move marks a shift from the previous policy, which restricted the formation of such entities to only banks. The revised conditions were officially published in the Royal Gazette on Thursday, signaling a new era for financial institutions in managing bad debts.
Roong Mallikamas, deputy governor for financial institution stability at the central bank, emphasized that a two-year application window is now open for establishing JV-AMCs. Each venture will be permitted to operate for up to 15 years, providing a long-term framework for these entities.
‘The central bank expects this measure will provide financial institutions with more options for managing bad debts,’ Ms Roong stated. ‘We believe this mechanism will help borrowers restructure their debt, sustain their livelihoods or business operations and support Thailand’s continued economic recovery.’
The introduction of JV-AMCs was initially launched during the pandemic to assist vulnerable borrowers in managing non-performing loans (NPLs). The program was extended after its initial expiration in 2024, highlighting the ongoing need for effective debt management solutions.
Krungthai Bank (KTB), the country’s second-largest lender by total assets, has announced plans to establish a JV-AMC next year. President Payong Srivanich shared that the bank has been studying the JV-AMC framework and discussing potential partnerships for some time. ‘KTB intends to apply for a business licence, with the venture expected to be formed next year,’ he said.
KTB is currently reviewing details of the new venture, including the types of loans to be transferred, partnership arrangements, and operational scope. The JV-AMC is expected to manage the bank’s secured NPLs, while unsecured debts may be transferred to Sukhumvit Asset Management under the government’s new debt resolution measures.
Mr Payong, who also chairs the Thai Bankers’ Association, noted that the association supports the government’s new debt resolution programme targeting small borrowers with total credit lines below 100,000 baht each. He highlighted that the initiative will rely heavily on AMCs as a key mechanism for managing bad debts.
In contrast, Kasikornbank (KBank) co-president Chongrak Rattanapian mentioned that the bank has no immediate plans to establish new JV-AMCs beyond its existing ventures. However, he stressed that the bank stands ready to cooperate with the government in addressing household debt and assisting customers with restructuring.
KBank, the country’s third-largest lender, operates JK AMC in partnership with JMT Network Services to manage distressed debt by focusing mainly on unsecured NPLs. Additionally, it runs Arun JV-AMC in collaboration with Bangkok Commercial Asset Management to handle secured NPLs.
This development reflects a broader strategy to enhance the efficiency of debt management and support economic recovery. By involving non-bank institutions, the central bank aims to diversify the approaches used in dealing with bad debts, ultimately benefiting both financial institutions and borrowers.
As the landscape of asset management continues to evolve, the role of JV-AMCs is set to become increasingly important. Their ability to handle a wide range of loan types and collaborate with various stakeholders will be crucial in ensuring sustainable financial practices across the country.