Prepared by Torbjön Becker.
For earlier treatments of financial and corporate sector restructuring, see Chapters II and III in Thailand: Selected Issues, IMF Staff Country Report No. 00/21 and Chapter II in Thailand: Selected Issues, IMF Country Report No. 01/147.
For details on corporate sector performance, see Haksar and Kongsamut, 2003, “Dynamics of Corporate Performance in Thailand,” forthcoming IMF Working Paper.
The definition of NPAs that is used includes NPLs at banks as well as the impaired assets transferred to AMCs. In other words, an NPL that is no longer with a bank is not called an NPL, but is still part of the pool of distressed assets until it is resolved.
The Bank of Thailand’s definition of NPLs changed in December 2002. The earlier definition included loans that were more than 3-month overdue and excluded doubtful of loss loans with mil provisioning, whereas the new definition includes loans classified as substandard, doubtful, doubtful of loss and loss.
The sectoral breakdown of NPLs include loans at foreign branches and finance companies, and the total level of NPLs will therefore differ from the previous chart that focuses on Thai commercial banks. Also, the “other” sector includes in order of importance, import businesses, banking and financial services, export businesses, agriculture, public utilities, mining and hire-purchase businesses.
Views may differ on what to include in the measure of distressed assets. Here we use a rather conservative measure in that restructuring deals that have been reached at the TAMC arc not subtracted from the pool of NPAs. Once progress on restructuring is more verifiable, for example by cash recoveries, part of the impaired assets at the TAMC and other AMCs could be taken out of the measure of NPAs. On the other hand, loans restructured and reclassified by banks immediately leave the pool of NPLs at banks. This may be overly optimistic in this measure of the overall level of distressed assets given the high rate of re-entry NPLs.
For a comparison of centralized AMCs, see Chapter III in Thailand: Selected Issues, IMF Country Report No. 01/147.
For an introduction to the TAMC, see Chapter III in Thailand: Selected Issues, IMF Country Report No. 01/147.
For more details on the operation of CDRAC, see Chapter II in Thailand: Selected Issues, IMF Staff Country Report No. 00/21.