The bank is in discussions with state-run Bangkok Commercial Asset Management, which is in the process of consolidating its own non-performing loans with the AMC.

Details concerning the value of the to-be-sold NPLs and timing have yet to be finalised.

The NPLs may be divided into batches of about Bt500 million, said Suvarn Thansathit, senior vice president.

Until recently, Bangkok Bank (BBL) had no policy to sell NPLs to other financial firms or asset-management companies as it believed that managing its own distressed debts would generate better returns.

NPLs held by BBL at the end of February amounted to Bt100.57 billion, representing to 10.94 per cent of total loans. The bank has targeted to reduce this to 7 per cent by the end of the year.

"Our target is quite ambitious and will not be easy to achieve. The bank will concentrate mainly on restructuring debts in the top 100 borrowers in terms of loan amount. But the bank does not intend to set a deadline for restructuring these debts," Suvarn said.

In addition to NPLs, the bank has a large number of non-performing assets (NPAs). NPLs are loans that have turned sour, while NPAs are loan collateral that the Legal Execution Department has agreed can be put up for sale.

The bank had planned to cut its NPAs by Bt10 billion this year from total of about Bt50 billion, but they are unlikely to fall significantly by year-end.

"NPA output is expected to be Bt10 billion, while the input is likely to equal that amount, thus one might offset the other for the entire this year," Suvarn said.

He acknowledged that the bank might not be able to achieve its target for selling off its NPAs as it has insufficient sales staff to handle such a volume. Presently, BBL staff working in its debt-restructuring division number about 100 nationwide. One half are on sales, the other half are back-office employees.

Suvarn said the bank's NPLs in the first quarter would not change much from the previous quarter in percentage terms. New bad loans in the period were Bt3 billion and relapsed NPLs remained unchanged.

At the end of last year, its NPLs fell significantly after the debt-restructuring plan of Thai Petrochemical Industry Plc (TPI) was completed.

The bank was as a result able to reduce its bad loans from 16.49 per cent at the end of November to 10.94 per cent at the end of December.

BBL is the biggest local creditor of TPI, the country's largest debt defaulter. TPI's total debt under restructuring is about Bt100 billion, of which Bt38 billion is owed to BBL.

Somruedi Banchongduang

The Nation