Bangkok--11 May--TMB
TMB today announced it has reached an agreement to sell 19.8 billion baht in Non-Performing Loans (NPLs) and Non-Performing Assets (NPAs) of the Bank and its subsidiary, Phayathai Asset Management Company Limited (PAMC), to Bangkok Commercial Asset Management Limited (BAM).
“This sale of NPLs and NPAs is part of our plan to improve our overall NPL asset quality,” said Mr. Boontuck Wungcharoen, TMB’s Chief Executive Officer. “TMB is happy to reach an agreement with BAM to buy the Bank’s NPLs and NPAs at a value of 19.8 billion baht. The deal includes 6 billion baht of outstanding principal from TMB’s wholesale banking division; 6.5 billion baht from SME banking; and 2 billion baht from retail banking; as well as NPAs with a property valuation price of 5.3 billion baht.”
The sale covers 3,730 NPL accounts and 750 NPA items from TMB, along with 477 NPA items from PAMC. Following this transaction, TMB’s NPL ratio will decrease from 16.0 percent in Q1/2009 to 13.2 percent, while the NPA ratio will reduce from 2.8 percent in Q1/2009 to 2.1 percent on the Bank’s consolidated financial statements. TMB aims to reduce its NPL ratio to a single digit in the future.
“The deal is part of TMB’s initiative to improve the quality of our assets by lowering the Bank’s NPLs. At the same time, we are raising quality standards for loan approval to help prevent new loans made during the current economic situation from turning into NPLs. As a result, TMB will have greater flexibility in running our business and releasing more new loans,” added Mr. Boontuck.
In late 2008, TMB signed an agreement to sell a portion of its NPLs to Sukhumvit Asset Management Limited (SAM). That NPL deal included 3.4 billion baht in outstanding principal of loans that were mainly made to SMEs. The transactions in late 2008 and this transaction are both part of the same NPL and NPA portfolio.
For this project, TMB appointed Baker Tilly Corporate Advisory Services (Thailand) Limited as the financial advisor and LS Horizon Limited as the legal advisor to ensure everything involved in the selling process was well-prepared and comprehensive. This included the screening of liabilities and assets, the selection of participating investors, preparation of documentation and information, and other procedures related to the selling process.
Mr. Bunyong Visatemongkolchai, President of Bangkok Commercial Asset Management Limited (BAM) said, “The Financial Institutions Development Fund (FIDF) policy requires BAM to act as a channel to purchase a greater number of NPLs from commercial banks than last year. The accounts that BAM has purchased from TMB is already over our target amount; however, BAM is ready to bring more NPLs under our management to help facilitate the operations of commercial banks.”
Once BAM has the NPLs and NPAs from TMB under its management, it will notify customers and ask them to restructure their debts, taking into consideration their current financial situation. BAM will focus on negotiation and reconciliation to reach mutually-beneficial settlements. For debts that are under litigation, BAM will even open opportunities for negotiations to help debtors to restructure their debts and return them to the economy.
For the NPAs that go under its management, BAM will produce a NPA Control Report as well as surveying, inspecting and posting sales announcements for these assets. To help make them more attractive with quality that meets market standards, many of these assets will be improved into houses that are ready to move in to and land that is ready to use.
Currently, BAM’s NPLs are 225,042 million Baht, equal to 97.65% of total NPLs owned by all financial institutions, which is an amount of 230,451 million Baht. NPAs under BAM’s management are worth 37,150 million Baht, or 25.17% of the total NPAs owned by all financial institutions, which is an amount of 147,572 million Baht. BAM intends to purchase an additional 50,000 million Baht of NPAs during 2009.
TMB Bank Public Company Limited
Founded on 8 November 1957, TMB Bank Pcl. operates a commercial banking business under a license granted by the Ministry of Finance, and with consent given by the Bank of Thailand. It also operates a securities business licensed by the Ministry of Finance and agreed to by the Securities Exchange Commission.
The Bank aims to respond to the needs of its clients through its 474 branch network, 106 foreign exchange centers, 2,014 ATMs, as well as electronics banking systems. Its business encompasses commercial banking, offshore banking, investment banking, and other businesses as permitted by the regulatory authorities, including acting as an insurance agent for its alliance insurance companies.
Listed on the Stock Exchange of Thailand, the Bank is the sixth largest bank, by total assets, in Thailand. As at 31 March 2009, its total assets are valued at THB 601,379 million.
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