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SOMRUEDI BANCHONGDUANG
BankThai yesterday finalised an agreement to sell its non-performing loan portfolio to Bangkok Commercial Asset Management (BAM).
The bank would sell off assets held by its subsidiary Sathorn Asset Management to BAM for 3.78 billion baht. The assets involve loan principal and accrued interest of 29.71 billion baht and a book value of 3.31 billion baht as of Feb 29.
Ekajai Tivutanond, a BankThai senior executive vice-president, said Sathorn would sell another 97 million baht in bad loans to Sukhumvit Asset Management Corp.
Both BAM and Sukhumvit Asset Management are distressed asset vehicles owned by the Financial Institutions Development Fund, also the major shareholder of BankThai at 42.1%.
The asset sales would reduce Sathorn Asset Management's loan portfolio to a book value of just 100 million baht.
''The bank is reviewing Sathorn's future operating plans, but it won't be closed for now. We will have to wait for a clear policy from the new strategic shareholder,'' Mr Ekajai said.
The FIDF announced last week that it would sell its shareholdings in BankThai to Malaysia's CIMB Group for 5.9 billion baht or 2.1 baht per share. The transaction must still be approved by the Finance Ministry.
The distressed asset sale, which was approved by BankThai shareholders earlier this month and was a condition of the CIMB investment, would help improve BankThai's capital adequacy ratio by a full percentage point to 9%, Mr Ekniti said.
He also denied reports that BankThai planned to transfer its collateralised debt obligations to Sathorn Asset Management.
BankThai's offshore CDO investments have plunged in value as a result of the collapse of the US sub-prime mortgage market. Provisioning expenses on the notes helped result in BankThai posting a loss of 2.08 billion baht for the first quarter and 6.9 billion last year.
At the end of March, BankThai reported non-performing loans of 10.8 billion baht, or 9.53% of total loans. Bad loans stood at 9.5 billion baht, or 9.66% of total loans, at the end of 2007.
Shares of BankThai closed yesterday on the Stock Exchange of Thailand at 1.63, down two satang, in trade worth 61 million baht. BAM president Bunyong Visatemongkolchai said NPLs in the banking system were set to grow this year due to high production costs.
He noted that bank bad loans rose by 11 billion baht in the first quarter, of which eight billion were loans to manufacturers and the rest individual loans.
BAM expected to purchase 50 billion baht worth of distressed assets this year, of which 15 billion would be from local banks and 35 billion from the Thai Asset Management Corp.
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