| Project description |
| This proposed project is in connection with a sale of NPLs by Kasikornbank and its subsidiary Phethai Asset Management Company in an auction that took place in late 2007. The proposed project involves the financing related to the purchase of and the subsequent resolution of a portfolio of NPLs (Portfolio) won by Inter Capital Alliance Asset Management Co Ltd (ICAAMC), a Thai company of which Morgan Stanley Emerging Markets Inc is the largest ultimate shareholder. |
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| Project sponsor and major shareholders of project company |
| The project sponsor is Morgan Stanley Emerging Markets Inc., a wholly owned subsidiary of Morgan Stanley. Morgan Stanley was incorporated in 1931 and is a global financial services firm that, through its subsidiaries and affiliates, provides its products and services to a group of clients and customers, including corporations, governments, financial institutions and individuals. Morgan Stanley's business segments include Institutional Securities, Global Wealth Management Group and Asset Management. |
| Total project cost and amount and nature of IFC's investment |
| It is proposed that IFC provide the project company a medium-term senior loan to and to make an equity investment in the NPL portfolio for an amount of up to $30 million in total. |
| Location of project and description of site |
| The project assets are located in Thailand. |
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| Anticipated development impact of the project |
The developmental impact of well-structured distressed asset transactions is well recognized. Such transactions help improve the stability of the banking system by:
- encouraging transparency in balance sheets as the true value of distressed assets is determined by the market value paid by the buyers of NPLs;
- and transferring distressed assets to specialized entities that can efficiently resolve such assets.
This helps the banking system achieve a capital adequacy level that is more consistent with the actual risks in bank portfolios. In addition, the efficient resolution of NPLs contributes to the development of a much better credit culture, especially in countries where the willingness to repay (as opposed to the ability to repay) has been the cause of serious portfolio problems in the banking systems. In most cases, such problems have had to be resolved at significant fiscal costs. |
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| IFC's expected development contribution |
| IFC’s development contribution in this project concerns its re-engagement in the Thai market where IFC has not had significant investment activity in recent years. However, through partnerships with entities such as Morgan Stanley, there may be considerable opportunities for IFC to make a contribution in the local NPL sector over the next two to three years. |
| Environmental and social issues - Category FI |
This project has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
The project involves IFC support for reworking a known distressed asset pool and considering the nature of activities supported, the Asset Manager will need to provide information pertaining to the pool regarding exposure to excluded activities on IFC's FI Exclusion List as well as information on any known unresolved social and environmental issues or high risk projects in the pool.
If the review indicates that the pool is broadly in compliance with the above requirements, the Asset Manager will be required to establish a Social & Environmental Management System (SEMS), relevant to its business process, that is satisfactory to IFC, prior to disbursement, to work with the assets being restructured to ensure that the projects are operating in compliance with the IFC exclusion list and the Applicable National Environmental and Social Laws and regulations, or have an action plan to achieve the same within a reasonable time frame, in any case not exceeding 18 months.
The Asset Manager will also be required to identify responsible, qualified persons to manage and implement the SEMS, demonstrate commitment and resources to implementing the SEMS, take action to remedy any gaps in implementation on an ongoing basis; and submit a periodic report to IFC as per a format to be provided by IFC.
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| For inquiries about the project, contact: |
Christine Wang
Level 29, Three Exchange Square
Central , Hong Kong
Phone: +852 2848-6507
Fax: +852 3407-9891 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
| Local access of project documentation |
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