Krongthong Karunyanara-torn, senior vice president of the bank and manager of the Properties Department, said BBL would sell only non-performing assets (NPAs) in classes C and D to BAM.

"But we'll manage our assets in classes A and B ourselves. The bank believes managing our own distressed properties in the higher grades will generate better returns," she said.

Krongthong said this practice was becoming a trend at most commercial banks.

Thailand's largest bank in terms of assets plans to sell about 10 per cent of its Bt40 billion worth of NPAs to BAM.

The bank groups its NPAs in four classes from A to D, with A being the highest quality and D the lowest.

BBL plans to reduce NPAs by Bt10 billion. It already sold Bt4.8 billion worth in the first half of the year.

Despite a slowdown in domestic consumption, retail investors still wield purchasing power.

"There are some retail investors who are looking to buy bank NPAs at discounted prices," said Krongthong.

Meanwhile, BAM president Banyong Visatemongkolchai said his company was holding discussions with three or four commercial banks about purchasing

NPAs.

BAM hopes to assume as much as Bt30 billion to Bt40 billion worth of bad assets.

Most NPAs are class C or D. Sixty per cent are land, while 20 per cent are residential or business properties.

Half of all NPAs up for grabs are in Bangkok.

BAM plans to sign a contract next month with the Thai Bankers' Association for the purchase of NPAs. The company's board met yesterday to decide how to manage the newly acquired NPAs.

BAM recently predicted that total assets under management would increase to Bt100 billion, from Bt38 billion currently.

Allowing banks to transfer NPAs to asset-management companies like BAM is part of the Bank of Thailand's policy of reducing bad debt on commercial banks' balance sheets.

Somruedi Banchongduang

The Nation