asks again for national AMC
September 28, 2000
Prime Minister Supachai Panitchpakdi has asked the Finance Ministry to consider
using the remaining Bt200 billion from the August 14th Banking Restructuring
Programme to form a national asset management company (AMC) to accelerate the
removal of non-performing loans from the banking system.
proposal is likely to further accentuate his differences with Finance Minister
Tarrin Nimmanahaeminda, who has strongly opposed using additional public money
to buy the bad loans.
believes that because the bad loans held by private banks have fallen to about
20 per cent of their total outstanding loans, they are in position to work
themselves out of trouble by establishing their own private AMCs. He is afraid
that creating a national AMC might encourage a greater moral hazard in the
Finance Minister Pisit Leeartham reaffirmed the Finance Ministry's stand at the
annual World Bank-IMF meeting in Prague yesterday, saying the government would
not use new public money to purchase bad loans.
government has provided all the necessary support except using public money to
directly buy private-sector bad debt," Pisit said. "In this
connection, the commercial banks are making full provisioning for the bad assets
and have set up their own asset management companies to deal with their
insisting on the establishment of a national AMC, Supachai contends that because
conditions in the banking sector have improved, the government should step in to
lend a hand in fully resolving this critical problem.
of allowing the bank restructuring programme's remaining Bt200 billion to sit
idle, it should be used to support the banking system, he said.
Chuan government established the Bt300-billion programme in 1998 to help private
banks recapitalise with government money. But the programme included tough
conditions that made commercial banks reluctant to participate. The conditions
were later revised, but a surplus remains.
proposing that the money be used to clear bad debt, Supachai is simply
suggesting the government shift its assistance from recapitalisation to asset
had earlier suggested that a national AMC would not simply buy out bad debt, but
should act as one of several bidders in a transparent, competitive bidding
national AMC could prevent asset prices from collapsing because it would
guarantee the existence of a buyer of last resort, he said.
lack of a secondary market for asset disposal has hindered the banking system's
full recovery, according to the US credit rating agency Standard & Poor's.
The system will need about US$25 billion (Bt1 trillion) to $30 billion to fully
recapitalise after the asset write-offs, it said.
NAREERAT WIRIYAPONG and THANONG KHANTHONG