Kasikornbank (KBank) has partnered with Bangkok Commercial Asset Management (BAM) to establish a joint venture asset management company (JV-AMC) to handle non-performing loans (NPLs).
Last week, KBank and BAM notified the Stock Exchange of Thailand of their intention to create a JV-AMC with registered capital of 25 million baht, with each holding a 50% stake.
KBank is participating in the joint venture through its subsidiary, Kasikorn Vision, and the partners are awaiting approval for the JV-AMC business licence from the Bank of Thailand.
BAM chief executive Bundit Anantamongkol said the venture will manage all types of KBank's secured bad debts with fixed-asset collateral, including corporate loans, small and medium-sized enterprises (SME) loans and mortgages.
The venture's initial capital of 25 million baht meets the central bank's minimum requirement, he said.
"Both partners will inject additional funds as needed for the purchase of bad assets. Under this arrangement, KBank will also provide additional liquidity support to customers, while BAM will act as the loan guarantor," said Mr Bundit.
He said BAM is also in discussions with another commercial bank to establish a separate JV-AMC.
The JV-AMC model aligns with the Bank of Thailand's policy introduced during the pandemic in 2022 to address NPLs within the banking sector. Three JV-AMCs are seeking business licences.
BAM, the nation's largest asset management company with around 500 billion baht in NPLs under management, is also setting up a JV-AMC with Government Savings Bank (GSB), named ARI Asset Management Co (ARI-AMC), with a capital investment of 1 billion baht.
ARI-AMC is acquiring and transferring NPLs from GSB over the course of three quarters in fiscal 2024, providing assistance to over 500,000 SME and credit card debtor accounts.
KBank, Thailand's third-largest lender by total assets, has also partnered with JMT Network Services to establish JK Asset Management (JK AMC), which has been operating since 2022.
Krungsri Securities has a positive view on the JV-AMC between KBank and BAM, citing BAM's expertise in NPL management and debt collection.
This partnership is expected to enhance KBank's debt collection capabilities and provide more options for managing NPLs, it said.
The joint venture is also expected to help KBank improve overall asset quality, with the bank's credit costs anticipated to normalise next year. As of June this year, KBank's credit cost was 1.88%, with an NPL ratio of 3.18%.
According to Krungsri Securities, JK AMC is likely to focus primarily on unsecured bad debt management, while the new JV-AMC between KBank and BAM will concentrate on secured bad asset management.