Thai Asset Company to Buy $6.8 billion in Bad Loans

By Wichit Chantanusornsiri, Bangkok Post

The Asset Management Corporation plans to purchase up to 270 billion baht ($6.8 billion) worth of non-performing assets and bad loans from local financial institutions over the next two years, a move that authorities say will help reduce the number of bad loans in the financial system by half.

The government plans to amend the AMC Act within the next few months to allow the state agency to purchase distressed assets from other institutions. The law currently restricts the AMC to purchasing only non-performing assets from the 56 finance companies closed during the 1997 crisis, as well as other financial institutions taken over by the Bank of Thailand.

According to the central bank, non-performing loans in the banking system at the end of March totalled 595.8 billion baht ($15.15 billion), or 10.92% of total loans outstanding.

Varathep Ratanakorn, the deputy finance minister, said the ministry would soon endorse the draft amendment of the AMC law and submit the changes for parliamentary approval.

Bad loans have been relatively slow to fall within the banking system over the past five years, despite economic growth, loan expansion and stronger profitability shown by local banks.

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