JV AMC to cut bad debt as 3 banks move towards joint ventures

JV AMC to reduce bad debt and revive economy as 3 banks show interest in joint ventures

• The Bank of Thailand (BOT) governor says that after the new JV AMC rules were issued, two to three banks have expressed interest in setting them up.
• BAM expects to close at least one JV AMC deal with a major financial institution in 2025 as a mechanism to expand its business and manage bad debt.
• Siam Commercial Bank believes establishing a JV AMC is necessary to improve the efficiency of debt management.
• Krungthai Bank says it is in talks and expects clarity on setting up a JV AMC early next year.
• Bangkok Bank says it has no plans to set up a JV AMC and prefers to manage bad debt in-house through its own mechanisms and teams.
• TMBThanachart Bank (TTB) says it already has subsidiaries that efficiently manage non-performing loans (NPLs).
• BAAC plans to use an “AMC in house” model, managing bad debt internally within the organisation.
   

The bad-debt problem in Thailand’s financial system is becoming a major bottleneck holding back the country’s economic potential in every dimension – corporate debt, household debt, and especially long-accumulated retail debt that has become a heavy burden for both debtors and financial institutions.

The weakened financial position of many households has caused consumption, investment and the circulation of money in the economy to slow continuously. At the same time, a large number of small businesses cannot access new credit because of unresolved legacy debt, a problem that has widened and created knock-on effects across the broader economy.

In recent years, the government, private sector and Bank of Thailand have rolled out various measures – tackling informal debt, restructuring formal debt, and helping vulnerable borrowers – but the challenge of delivering a comprehensive, end-to-end debt solution remains unresolved.

Similarly, the “Khun Soo Rao Chuay” scheme (You Strive We Support), launched by the BOT in 2024, has helped a number of borrowers but has not been able to reach widely or deeply enough to match the scale and entrenched nature of Thailand’s household debt problem.

As a result, further measures are needed to address this chronic issue, leading to a major collaboration between the Finance Ministry, the BOT and the Thai Bankers’ Association through a scheme to resolve retail bad debt below 100,000 baht, “Quick Debt Closing and Moving Forward”, to help a large group of borrowers return to the formal system. 

In parallel, the BOT is pushing forward with JV AMCs, or joint-venture asset management companies. The central bank has now issued a formal regulatory framework, with the goal of providing a special tool to help financial institutions manage bad debt in the system more efficiently, acting as a mechanism for banks to offload legacy NPLs.

BOT: 2–3 banks interested in setting up JV AMCs

Vitai Ratanakorn, governor of the BOT, said JV AMCs have attracted strong interest following the central bank’s new notification issued last week. The announcement reopened the door for commercial banks to set up JV AMCs after the previous regulation expired on December 31, 2024, which had prevented interested banks from moving forward for some time.

He said JV AMCs are another form of debt-relief scheme that benefits the system and can help borrowers, although the depth of concessions may not be as great as in programmes designed to provide very deep relief for highly vulnerable debtors, such as previous BOT-led projects. Even so, having an additional tool expands the range of options for debt restructuring and resolution.

Under the new rules, banks, non-banks and existing AMCs can jointly establish JV AMCs. Vitai said at least two to three commercial banks have shown interest in using this mechanism as another way to tackle bad debt, particularly by transferring some distressed assets off their balance sheets into JV AMCs for dedicated management.

This structure will allow banks more room to resolve accumulated legacy debt and create new channels to support borrowers who still have repayment potential, under more flexible management approaches.

 

BAM aiming to close deals in 2025–2026 with two major banks

Dr Rak Vorrakitpokatorn, CEO of Bangkok Commercial Asset Management Plc (BAM), said that on JV AMCs, the company is currently in talks with two to three major financial institutions. He expects to close at least one deal in 2025, with another likely in 2026, while both sides are still discussing the types of assets that will be transferred into the JV AMC structure.

He said JV AMCs will be a key mechanism for driving the concept of “creating the BAM universe” in a systematic way. Joint ventures are not just business expansion, but an important tool for enhancing BAM’s capabilities without increasing the workload burden across the entire organisation.

JV AMCs are also one element of BAM’s “three bullets” strategy, based on serious, long-term partnerships rather than loose or temporary collaborations. These ventures require genuine commitment, binding obligations, and make use of existing structures that partners have built – they are not new engines operating separately from BAM.

“So far we have ‘married’ or formed JV AMCs with two partners. The first has generated a profit of 82 million baht, and the second 73 million baht. The combined profit makes the ‘dowry’ worthwhile and represents impressive performance. We hope that new JV AMC companies will handle portfolios worth at least 30 billion baht over the next three to five years,” he said.

 

JV AMCs as a core tool to manage bad debt

Kris Chantanotoke, CEO of Siam Commercial Bank (SCB), said the concept and direction of establishing JV AMCs – joint ventures between banks and asset management companies – are central to helping banks restructure debt and increase sustainable business flexibility.

For SCB, details on a JV AMC cannot yet be disclosed as discussions and preparation are ongoing, but he confirmed that the process is progressing and the bank is trying to complete it as quickly as possible.

“Even though we cannot yet say who we are negotiating with or how many partners there are, what is clear is that the talks are continuing and moving in a positive direction,” he said.

He added that JV AMCs are not just a concept but a “necessity” for the banking system, especially as banks must maintain adequate liquidity while preserving room to extend new loans. This necessity means setting up JV AMCs is not just optional but something that needs to be done to help banks balance asset management with their role in supporting the wider economy.

The main purpose of establishing JV AMCs is to improve the efficiency of debt management, making the entire process – from holding and managing NPLs to selling assets or extending new loans – more flexible and agile.

“When we move into early next year, if the JV AMC is in place, we will start to see real pilot projects where the bank and the JV AMC work together. This period will be crucial for testing the system. If the pilot runs smoothly, the proportion of assets sold from the bank to the JV AMC is likely to increase over time,” Kris said.

 

Krungthai aims to close JV AMC deal early next year

Payong Srivanich, CEO of Krungthai Bank, said that setting up a joint-venture asset management company is one of the tools the financial system can use to handle problem loans. The bank is currently in discussions and expects to have clarity on the establishment of a JV AMC early next year.

He explained that debt resolution is now divided into two parts. The first is retail debt not exceeding 100,000 baht, which will be handled through SAM (Sukhumvit Asset Management) under the “Quick Debt Closing and Moving Forward” project. The second is the group of borrowers who cannot join this scheme, such as those with collateralised loans.

For this second group, the bank will continue to use normal market mechanisms, including selling NPLs as usual, and in future using JV AMCs to help resolve the remaining distressed debt.

“If all the tools are ready, now is the right time to use them. The bank may set up several JV AMCs, depending on the portfolio, cases and needs of different partners. There is no need to limit it to one joint venture. With the full set of tools available, we can proceed in parallel to meet the needs of diverse borrower groups,” he said.

 

Banks preferring in-house bad-debt management not keen on JV AMCs

Chartsiri Sophonpanich, CEO of Bangkok Bank Plc (BBL), said the bank’s current strategy is to manage bad debt through its own internal mechanisms, relying on its own resources and teams, rather than entering external joint ventures in the form of JV AMCs. For now, the bank has no plan to establish a JV AMC.

He said Bangkok Bank believes its internal mechanisms remain effective. At the same time, the bank is ready to cooperate with the government, particularly in resolving small retail debts of less than 100,000 baht, to help reduce NPLs among small borrowers and support the recovery of the financial system so it can continue driving economic growth.

Thakorn Piyapan, CEO of TMBThanachart Bank Plc (TTB), said many commercial banks are currently managing problem loans through sales, which is already a standard mechanism. Therefore, resolving bad debt does not always require establishing an AMC as the primary option.

For some asset types, such as houses or factories, more time may be needed for resolution. However, banks commonly manage and then sell off these assets, which has the advantage of quick cash inflow and immediate balance-sheet clean-up.

TTB already has subsidiaries specialising in bad-debt management, which receive NPLs transferred from the bank’s balance sheet and work to resolve them. If these subsidiaries cannot successfully manage the assets, sale remains an option. This demonstrates that a bank with strong internal structures can rely on in-house mechanisms.

“Setting up a JV AMC raises several questions about what extra benefits it will bring. If an institution already has an effective debt-management team and process, transferring loans to a JV may not be worthwhile, as it could mean losing fee income or control over the debt-resolution process. However, if a bank does not manage these aspects well, a JV AMC can be a good alternative for tackling legacy NPLs,” he said.

 

BAAC preparing ‘AMC in house’ model

Chatchai Sirilai, President of the Bank for Agriculture and Agricultural Cooperatives (BAAC), said the bank will address agricultural debt through an “AMC in house” model.

This does not involve creating a separate AMC entity, but instead managing distressed assets internally within BAAC under its existing mandate and powers.

He said the plan will be presented to the bank’s board, chaired by Deputy Prime Minister and Finance Minister Ekniti Nitithanprapas, by the end of November. Some elements may require additional approval from the Cabinet.

Chatchai explained that the approach to agricultural debt differs from the typical practice of transferring NPLs to AMCs to remove them from the system, as commercial banks do. Agricultural loans differ in several dimensions:

1. Nature of the loans – Farmers borrow according to crop cycles, which vary by product, and a single farmer often grows several crops. As a result, one BAAC customer usually has multiple loan accounts, making it difficult to transfer NPLs out in a way that fully closes the debt. Instead, the focus is on easing repayment burdens.

2. Nature of collateral – Collateral for farm loans is typically income-generating land. Seizing this collateral would destroy the farmer’s ability to repay, unlike general credit such as home loans, car loans or credit cards, where assets are not usually the main source of income.

Under the plan to be proposed to the board, BAAC will design the structure and operational mechanisms first, then screen which debt groups should enter the in-house resolution process. The aim is to help small farmers reduce their debt burdens, extend repayment periods, ease instalments and give them space to resume productive work.

“The consideration of debt groups may include NPLs, long-standing persistent debt, and borrowers aged over 70, many of whose accounts are currently under repayment suspension, both secured and unsecured,” he said.

According to a source, the Finance Ministry has instructed BAAC to create an asset-management mechanism to handle agricultural debt in a way similar to general household-debt resolution but tailored to farmers’ specific behaviour. The target group is about 100,000 farmers with distressed debt totalling 7–8 billion baht.