Bunyong Visatemongkolchai, now in his second four-year term as president of BAM, says the merger brought about a stronger financial base and a network of differently skilled staff.

"We haven't calculated what the exact figures are from the benefits of the merger," he says.

BAM has a network of 24 branches around the country, while AMC has many finance experts with competency in the wholesale banking field, says Bunyong.

The combination of all the good aspects from the two organisations has made wonderful things happen to the newly merged firm, which is still named BAM.

First, BAM is still flourishing with ongoing business, despite the fact that its operations were supposed to have been shut down five years ago.

Second, BAM can be a big player in the defunct asset market which helps drive the market prices' mechanism.

Finally, BAM has the potential to list its shares in the Thai stock market.

Let's see how Bunyong has managed a huge amount of combined assets from the two organisations:

More than a year since the merger, the combined staff has been reduced to 1,300, of which 800 are from AMC and the rest from BAM. Five years ago, total staff of both numbered 4,000. Headquarters were reduced to one. Since May, all of the AMC staff have been moved to BAM headquarter on Surasak Road.

"At least, some of the redundant overhead costs have been reduced," says Bunyong.

Total non-performing loans (NPLs) under management by the merged firm currently account for Bt230 billion and non-performing assets (NPA) for Bt40 billion. Although merged, the NPL and NPA portfolios from the two organisations are different. Most of AMC's portfolios are quite large by value, while BAM's are smaller.

Out of a total of 50,000 debtors, 2,000 are large-scale, each of whom shoulders more than Bt25 million worth of debt. They represent about 80 per cent of BAM's total NPL portfolios.

Bunyong says some of AMC's large NPAs upcountry were resolved by long-term BAM staff living in those areas and who knew more about them than did AMC's staff.

"The hardest part of debt resolution is at the negotiation stage," says Bunyong, adding that if negotiations are successful, everything will be under control. BAM now uses one staff member to take care of hundreds of debtors. But Bunyong has targeted a reduction in this workload to 100 debtors per staff member.

This year, BAM launched two projects to help its debtors discharge their debts more easily, so they can resume repaying their debts under new loan conditions.

One project is called "Kuen Baan Hai Khun" (Return Your Home) and was designed to help debtors who want to reclaim their houses after finalising debt-rescheduling. Debtors who enter this scheme pay only 70 per cent of their home's appraisal prices. They are also allowed to discharge their debts under the old conditions. Moreover, for those who cannot afford to pay at one time to get their homes back, BAM offers them a five-year interest-free loan.

"There are about 1,000 debtors using this scheme, accounting for about Bt2 billion of total adjusted debts," says Bunyong. "The concept of resolving non-performing debts or assets is to reach a compromise on debt repayment under the new term conditions of loans that make both sides - creditors and debtors - happy".

Not only BAM will benefit from the quick resolution of bad debts; so will the country's economy as a whole. After releasing their bad debts, commercial banks will be able to extend new lending to others.

For the first 11 months of the year, BAM posted Bt8.7 billion in revenues and a net profit of Bt1.4 billion. Bunyong expects revenues and the net profit to reach Bt10 billion and Bt1.7 billion, respectively, for the entire year.

Apart from the government's given budget, BAM has a credit line of Bt10 billion from Krungthai Bank and a cash flow of Bt2 billion to facilitate the purchase of NPLs and NPAs from commercial banks.

At the helm of BAM, Bunyong's business plan is to shift the company's focus from NPL to NPA management.

"There's still room for growth in NPA management," he says, adding that BAM currently holds Bt40 billion worth of NPAs, while total NPAs in the country total as much as Bt170 billion. Bunyong's goal is to hold a majority proportion of NPAs against its total portfolio in the future. He believes commercial banks will release either their NPLs or their NPAs to maintain their capital-adequacy ratio following the new international accounting standard if they do not want to mobilise more capital.

As another way of keeping cash safe, BAM chooses to pay commercial banks for bad assets with bond issues, with the principal to be paid at one time in the final year of the bonds' terms.

Bunyong will manage funding by issuing zero-coupon bonds to pay for the NPLs and NPAs acquired from commercial banks in the future. The terms of payment will correspond to the grade that the assets are classified, so that the firm can match the amount of loan repayment with its future income from the assets. For instance, assets classified as grade A with an average appraisal price of 82 per cent will repay the principal in two years. Those that are grade D with 67 per cent of appraisal price on average will repay the principal in nine years.

After striking a deal with the Thai Banker's Association to purchase Bt4 billion worth of NPLs and NPAs from commercial banks and another Bt4-billion deal with Krungthai Bank this year, BAM has targeted the purchase of another Bt50 billion worth next year.

To obtain a cheaper resource of funds, Bunyong has a plan to list BAM shares on the Thai bourse.

"If BAM wants to make NPA management its business focus, it needs a lot of funds to turn its acquired defunct assets into performing assets," he says.

Although dissuaded by the board of directors regarding listing on the Stock Exchange of Thailand, Bunyong still insists that this remains his intention. He expects BAM to become a property broker beyond its defunct asset-management role. About 90 per cent of NPAs are from houses and the rest from vacant land. It has been found that houses are resaleable without much marketing effort after they have been renovated.

Sasithorn Ongdee

The Nation