BAM Symposium: Thailand's fight against bad loans starts now!

BAM Symposium: Thailand's fight against bad loans starts now!

The BAM Symposium, the first event of its kind, took place today, organized by Bangkok Asset Management Company (BAM). Under the theme “New Era of AMC – Revitalizing Assets to Boost the Thai Economy,” experts gathered to discuss pressing issues in the Thai economy. A key concern was the high level of household debt, which despite a decline is still above 86%, and the associated bad loans, which account for almost 4% of the total. Small and medium-sized companies are particularly affected, with 8-9% of loans in default.

In the past, Asset Management Companies (AMC) had played a significant role by absorbing up to 20% of bad loans. However, this proportion is currently only around 10%. It was emphasized that better cooperation between AMCs and banks is necessary to overcome this challenge and bring debtors back into the economic system. The Bank of Thailand (BoT) is therefore planning major changes to make it easier to establish new joint venture AMCs. The aim is to increase flexibility and, in particular, to better support small and micro loans.

An important point of the discussions was the planned first phase of the project, in which bad loans will be transferred from banks to AMCs. The focus here is on 1.5 to 2 million debtors, with a total of over 700,000 loans from commercial banks to SAM, around 800,000 from non-bank financial institutions and 400,000 to 500,000 from state banks to Ari AMC. With over 1 trillion baht of bad loans under management, the task remains enormous.

Strategies for reducing loans

The need to reduce non-performing loans (NPLs) runs like a common thread through the event. A key goal is to improve banks' balance sheets and increase their lending capacity. This is important not only for the stability of the banks, but also for the entire economy of Thailand, as easy lending is of great importance. Government officials want to achieve this through changes to existing policies without the need for new laws, which promises faster implementation.

Another step to improve the situation is the possibility for commercial banks to transfer NPLs to their asset management companies. This could serve as an incentive to motivate not only public but also small private banks to take action. Specialist solutions such as Ari Asset Management Co (ARI-AMC), a joint venture with Bangkok Commercial Asset Management Plc and Government Savings Bank, could be crucial here.

Events like the BAM Symposium clearly show how important it is to bring together the various stakeholders in the area of ​​asset management in order to find joint solutions to pressing economic challenges. The focus should not only be on solving the problems in the short term, but also on a long-term strategy for the rehabilitation of debtors, as already highlighted by SAM and other AMCs.

The challenges should not be underestimated, because the complex debt structure and the high number of small, often difficult-to-solve debts present market participants with major tasks. One thing is clear, however: the symposium was a step in the right direction to set the course for sustainable economic development in Thailand.