Finance Ministry proposes joint venture asset management companies to aid debtors
The Finance Ministry is advocating for collaborative investments between Specialised Financial Institutions (SFIs) and Asset Management Companies (AMCs), proposing the formation of joint venture asset management companies (JV-AMCs). This initiative aims to aid debtors who collectively hold three million accounts amounting to a total value of 230 billion baht, stated Paopoom Rojanasakul, the secretary to the finance minister.
Rojanasakul explained that the formation of joint ventures, where both SFIs and AMCs hold an equal 50% control, will address the ongoing issue of SFIs’ limitations in managing non-performing loans (NPLs). Current regulations prevent SFIs from agreeing to debt haircuts, leading to the accumulation of retail NPLs. Moreover, the cost of debt collection often outweighs the value of the debt itself, resulting in chronic bad debts within SFIs.
A Cabinet resolution passed in December 2023 endorsed measures to aid debtors through JV-AMCs and to lessen the interest burden on debtors, reflecting government policy. The ministry anticipates these steps to facilitate debt restructuring within SFIs, providing increased flexibility and aligning with the government’s integrated approach to debt resolution.
The proposal allows SFIs to invest jointly in establishing JV-AMCs and transfer some of their debt (up to a limit of 20 million baht) to the JV-AMC. This would enable debtors to restructure or write off portions of their debt.
The ministry confirmed that debt restructuring will be offered at least once, incorporating a reduction of instalment payments and the suspension of principal payments.
The Bank of Thailand is currently reviewing potential criteria to encourage JV-AMCs, with an announcement expected later in the month. Concurrently, the Government Savings Bank (GSB) is negotiating with Bangkok Commercial Asset Management Plc, known for its expertise in debt restructuring, about forming a JV-AMC.
GSB plans to commence operations of the JV-AMC in the first quarter of this year. Initially, the JV-AMC will assist GSB’s debtors, before extending help to debtors of other SFIs in subsequent phases, reported Bangkok Post.
