## tnmea2024004

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### Executive summary: role, advantages, and risks of centralized, state‑sponsored AMCs
- Purpose and mechanism:
  - AMCs consolidate creditor claims and scarce expertise to purchase and collectively manage impaired assets from banks.
  - Efficiency gains likeliest where problems are widespread, borrowers have multiple creditors, and NPLs are large, collateralized, and relatively homogenous (often corporate and commercial real estate loans).
  - AMCs can set benchmark prices and adopt standard procedures for workouts and asset sales, potentially jump‑starting distressed asset markets and restoring market liquidity.
- Key tradeoffs and risks:
  - Poorly designed or implemented AMCs can entail significant moral hazard and fiscal cost.
  - Critical design issues: selection of assets, valuation and transfer pricing, funding and capital structure, governance and management independence, and operational framework.
- Practicable guidance:
  - Transfer price should be based on the real economic value (sum of discounted future cashflows — an income approach to fair value).
  - In a crisis, transfer prices are likely to lie between market and book value.
  - Public funding should come from the government using cash or bonds carrying market terms and tailored to expected cashflows.
  - Central banks should avoid directly funding AMCs or permanently guaranteeing AMC debt.
  - AMCs should have sound governance, arm’s‑length oversight, transparency, and a clear mandate to maximize recoveries within a predefined lifespan (for example, 5 to 10 years).
  - To mitigate moral hazard, restrict AMC purchases to a limited time window (for example, the first six months to one year).

### Taxonomy, preconditions, and when AMCs may be appropriate
- Taxonomy overview (four arrangements by public/private involvement and centralization):
  - Impaired assets retained in a bank workout unit or SPV (originating bank).
  - Privately owned pooled AMC or SPV (cooperative private AMCs rare).
  - Case‑by‑case SPVs for individual failed banks.
  - Publicly owned, centralized AMC purchasing NPLs from banks and managing them collectively.
- Preconditions for establishing a state‑sponsored centralized AMC:
  - Guided by rigorous analysis of banks’ NPL portfolios, market and macroeconomic context, and transparent assessment of AMC costs, risks, and public interest.
  - Typically warranted only in exceptional systemic financial crises with unmanageable NPLs.
  - Historical threshold: in most state‑sponsored AMCs established between 1989 and 2022, the banks’ book value of distressed assets transferred to the AMC represented more than 5 percent of GDP; among these:
    - half remained below 10 percent of GDP,
    - one‑third surpassed 10 percent of GDP,
    - nearly a handful reached more than 20 percent of GDP.
- Critical preconditions and risks:
  - Realistic asset value and macro assumptions; commitment to recognition and fair allocation of losses; reliable accounting and supervision; independent asset quality review; robust auditing; sufficient operational capacity; effective insolvency and debt resolution frameworks; reliable borrower information and clean titles.

### Valuation, transfer pricing, funding, and capital structure
- Valuation and transfer price guidance:
  - Distinguish three valuations exactly as in the source: book value (accounting), market value (cyclical/structural), and economic value (discounted cashflows over a longer, less procyclical horizon).
  - AMCs should estimate real economic value using prudent macroeconomic assumptions and incorporate funding and operating costs.
  - Historical experience: more than half of AMCs in the sample received distressed assets at the banks’ book value (100 percent transfer price); only five AMCs with sufficient information achieved a recovery ratio above 50 percent of banks’ book value.
  - Supervisors could introduce time‑bound collateral haircuts based on collateral type and time past due.
- Funding and liability design:
  - Preferred government funding channels: direct cash injection; AMC issuing government‑guaranteed bonds exchanged for assets; government bonds given to AMC to pay transferred assets.
  - Government‑guaranteed AMC bonds should be tradable and listed, meet collateral requirements for central bank liquidity, and have sufficient tenors to match the AMC timeframe.
  - Central bank funding is not recommended except as a temporary urgent measure subject to government indemnity.
  - Liability structure should reflect expected cashflows and risks; AMC should pay market interest rates and include some pure market funding as benchmark.
- Capital and leverage:
  - AMC should start with sufficient capital to absorb early losses; capitalization should be commensurate with high financial risks but allow leverage to acquire large portfolios.
  - Caps on AMC leverage are useful safeguards (example practice cited).
  - Equity may include subordinated debt; cost of capital should be aligned with performance by linking dividends and subordinated payments to recoveries and net income.
  - Ownership forms vary: full state ownership to public‑private partnerships; state participation typically required after systemic crises.

### Governance, independence, transparency, and operations
- Mandate and corporate governance:
  - Mandate: clearly defined by law, focus on prudent valuation and maximizing asset recovery values within the AMC time horizon, include regular disposal targets, framed to reduce fiscal risk, incentivize restructuring and debt workouts, and attract skilled staff with market‑based compensation.
  - Board oversight: board of directors should oversee management, set policies, appoint executives, and determine risk appetite; board committees should include audit, remuneration, and potentially nominations and investments committees.
  - Internal controls, conduct and ethics codes, conflict‑of‑interest disclosures, compliance reporting and internal audit with direct reporting lines.
- Legal and operational independence:
  - AMC should be a separate legal entity at arm’s length from government; legislative establishment is preferable.
  - Fit‑and‑proper tests for board nominees; liability protections via insurance or legal indemnities.
  - Operational and budgetary independence; separate operating budget from asset purchase funding.
- Transparency and accountability:
  - Full, accurate, and timely public disclosure: externally audited and published quarterly and annual financial statements using internationally accepted accounting standards (for example, IFRS or same as banks).
  - External auditors should be independent and rotate periodically (example: every three years).
  - Reporting to parliament and/or national public auditor; finance ministries often oversee AMC performance and business plans; resolution authorities typically lead oversight when AMCs used in bank resolution.
- Servicing and portfolio strategy:
  - Business plan must define mix of sale, investment, and holding strategies consistent with mandate, risk appetite, and lifespan.
  - Loan servicing options: retained by originating banks (short‑term), in‑house, or outsourced; outsourcing requires careful contract design.
  - Proactive strategies should avoid warehousing and include property services, restructuring, legal actions, and realistic write‑offs.
  - Strong risk management and controls to mitigate fraud, legal liabilities, reputational risk, data loss, and staff churn.

### Moral hazard, timing, and alternatives
- Market failure rationale:
  - AMCs can provide a floor on valuations and remove uncertainty around bank exposures, mitigating fire‑sale dynamics and second‑round effects that impair lending.
  - If AMC purchases at real economic value, it may avoid losses and capture upside if recovery is robust; pricing uncertainty is extreme and P* significantly below book value may lead to unwillingness to sell.
  - Purchasing NPLs at higher prices transfers losses to the state and creates moral hazard; large mispricing and volumes transferred can jeopardize sovereign debt sustainability.
- Alternatives to AMCs:
  - Bail‑in of eligible creditors; partial transfer of performing assets and protected liabilities to healthy banks; temporary bridge banks; state‑supported securitization schemes and asset guarantees.
- Timing and sequence:
  - AMCs are best deployed after initial containment efforts in a systemic crisis; establishing an AMC during the initial phase can increase state risks and costs.
  - Steps to operationalize an AMC (legal framework, funding, valuation, staff recruitment) take time.
- Measures to limit moral hazard:
  - Limit AMC asset purchase windows in time (example: first six months).
  - Prevent cherry‑picking and asset reclassifications; execute transfers promptly once scope and price are defined.
  - Avoid open‑ended repurchase options; include transfer and dispute‑resolution mechanisms; include sunset clauses (typical lifespan experience: between 5 to 15 years).

### Annex 1 — selected facts and country highlights (sample of 30 centralized state‑sponsored AMCs established between 1989 and 2022)
- Aggregate and sample features:
  - Total cases included in annex: 30.
  - Many AMCs transferred portfolios exceeding 5 percent of GDP.
  - Only half of centralized AMCs with sufficient information fully repaid all initial funding.
  - More than 40 percent of the AMCs were still in operation at the end of 2022.
- Selected country statistics and outcomes (exact figures as in source):
  - Burkina Faso (BRCB): Size transferred: CFAF 64.4 billion (6.5 percent of GDP). Recoveries: CFAF 10.8 billion. Recovery rate: 16.8 percent. Year of creation: 1991. Ceased operations in 2002.
  - Nigeria (AMCON): Capital issued: NGN 10 billion. Total funding: NGN 5.5 trillion. Outstanding debt: NGN 4.7 trillion owed to the central bank (2023) (85.5 percent of initial funding). Size transferred: NGN 4.02 trillion (7.2 percent of GDP). Recoveries: NGN 1.6 trillion (2023). Recovery rate: 34.3 percent. Average transfer price: 43.8 percent.
  - China (Cinda, Great Wall, Huarong, Orient): Capital issued CNY 40 billion (CNY 10 billion per AMC). Total funding and means: CNY 1.4 trillion. Size transferred: CNY 1.4 trillion (15.5 percent of GDP). Recoveries: CNY 0.21 trillion. Recovery rate: 15.0 percent. Average transfer price: 100 percent for initial transfers.
  - Indonesia (IBRA): Total funding: IDR 654 trillion in government bonds. Size transferred: IDR 645 trillion (55.8 percent of GDP). Recoveries: IDR 151 trillion. Recovery rate: 23.4 percent. Average transfer price: 100 percent in practice.
  - Ireland (NAMA): Total funding and bonds: EUR 30.2 billion in senior bonds with state guarantee (95 percent of transfer price). Size transferred: EUR 74.0 billion (44.2 percent of GDP). Recoveries: EUR 47.4 billion. Recovery rate: 64.1 percent. Average transfer price: 43.0 percent.
  - Spain (SAREB): Capital issued: EUR 1.2 billion and EUR 3.6 billion of subordinated debt. Total funding: EUR 50.8 billion state‑guaranteed bonds. Size transferred: EUR 107.1 billion (10.5 percent of GDP). Recoveries: EUR 32.5 billion. Recovery rate: 30.3 percent. Average transfer price: 47.4 percent.
  - Sweden (Securum and Retriva aggregated): Capital issued: SEK 27.8 billion. Total funding: SEK 30.5 billion, of which SEK 13.5 billion state guaranteed. Size transferred: SEK 112 billion (6.3 percent of GDP). Recoveries: SEK 57 billion. Recovery rate: 50.9 percent.
  - United States (RTC): Total funding: USD 91.3 billion (USD 60 billion from budgetary resources; USD 30.1 billion from government bonds; USD 1.2 billion from banks). Size transferred: USD 465 billion (8.2 percent of GDP). Recoveries: USD 395 billion. Recovery rate: 85.0 percent. Average transfer price: 100 percent. Predefined lifespan: Seven years (met).
- Case vignettes with rates and lifespans:
  - Zimbabwe (ZAMCO): Capital issued: USD 1 million. Total funding: USD 1.18 billion (government bonds). Size transferred: USD 768 million (2020). Total amount paid: USD 1.13 billion. Year of creation: July 2014. Predefined lifespan: Ten years. Still in operation but winding down.
  - Thailand (TAMC): Capital issued: THB 1 billion. Size transferred: THB 780 billion (14.6 percent of GDP). Recoveries: THB 265 billion. Recovery rate: 34.0 percent. Predefined lifespan: 12 years. Closed in June 2013.
  - Vietnam (VAMC): Capital issued initial VND 500 billion; revised VND 2 trillion. Purchased NPLs amounted to VND 375 trillion as of December 2020. Year of creation: May 2013. Mandatory transfer for banks with NPL ratio above 3 percent. Still in operation.
  - Korea (KAMCO / NPL Fund): Capital issued: KRW 38.5 trillion / KRW 106.2 trillion (contextual "36.3 percent" noted in source). Total funding and means: KRW 21.5 trillion of state‑guaranteed bonds. Size transferred: KRW 106.2 trillion (18.0 percent of GDP). Recoveries: KRW 46.1 trillion. Recovery rate: 43.4 percent. NPL Fund created November 1997; NPL Fund liquidated in November 2012; AMC still exists with revised KAMCO Act (2012).
  - UK (UKAR): Total funding/liabilities owed to government: GBP 48.7 billion. Size transferred: GBP 116 billion (7.2 percent of GDP). Cumulative profit circa GBP 8 billion. Average transfer price: 100 percent. Selling process concluded October 2021.
- Observations on transfer prices and recovery:
  - Several AMCs assumed assets at book value (100 percent transfer price) in many jurisdictions (examples cited include China initial transfers, Indonesia, Malaysia, several others).
  - Only five AMCs in the sample with sufficient information achieved recovery ratios above 50 percent of banks’ book value.

### Conclusion and policy guidance (summary of key policy recommendations)
- AMCs are not a panacea; they should be a last resort after assessing benefits, costs, and risks and after exploring alternatives.
- Preconditions before establishing an AMC:
  - Commitment to recognizing and fairly allocating losses.
  - Address legal, institutional, regulatory, and market shortcomings for NPL management.
  - Realistic assessment of risks and costs over the AMC’s expected lifetime.
- If used, integrate the centralized AMC into a comprehensive NPL strategy including legal and insolvency reforms, alternatives for assets not suitable for transfer, and resolution of nonviable banks with losses shared among shareholders and creditors.
- Establish fair transfer pricing estimating real economic value and incorporating significant costs and risks; otherwise the AMC defers losses to the taxpayer.
- Maintain clear mandate, sound governance, operational independence, transparency, and sunset clauses to mitigate but not eliminate high fiscal and operational risks.

*Source: tnmea2024004 - Preface, Boxes 1–3, and Annex 1 (Technical note chapter/section).*

### Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

### Preface

### Acknowledgments and authorship
- This technical note reflects contributions of the Financial Crisis Preparedness and Management Division of the IMF’s Monetary and Capital Markets Department.
- Special acknowledgments for inputs and comments go to Thierry Bayle, Laszlo Butt, Olivier Frécaut, Sergio Grittini, Janne Harjunpää, Edda Rós Karlsdóttir, Suchitra Kumarapathy, Uffe Mikkelsen, Alvaro Piris, Marcos Souto, and Raadhika Vishvesh.
- The authoring team is grateful to Marina Moretti for providing intellectual direction and clarity.
- Administrative support provided by Charmane Ahmed and the administrative team.

### Executive summary: role, advantages, and risks of centralized, state‑sponsored AMCs
- Centralized asset management companies (AMCs) have been used in past systemic banking crises and have advantages but also costs and risks.
- Past examples cited: the savings and loans crisis in the United States in the 1980s, the Nordic and Asian crises in the 1990s, and the global financial crisis (Ireland and Spain).
- Purpose and mechanism:
  - AMCs consolidate creditor claims and scarce expertise to purchase and collectively manage impaired assets from banks.
  - Efficiency gains are likeliest where problems are widespread, individual borrowers have multiple creditors, and NPLs are large, collateralized, and relatively homogenous (often corporate and commercial real estate loans).
  - AMCs can set benchmark prices and adopt standard procedures for workouts and asset sales, potentially jump‑starting distressed asset markets and restoring market liquidity.
- Key tradeoffs:
  - Poorly designed or implemented AMCs can entail significant moral hazard and fiscal cost.
  - Selection of assets, valuation and transfer pricing, funding and capital structure, governance and management independence, and operational framework are critical design issues.
- Valuation and transfer price guidance:
  - AMCs should pay a transfer price based on estimates of the real economic value of the assets, defined as the sum of their discounted future cashflows (an income approach to fair value).
  - In a crisis, transfer prices are likely to lie between market and book value.
  - NPL transfers at prudent valuations are more likely when banks are in resolution or have received public support, giving authorities leverage to require divestment at a discount to book value.
- Funding guidance:
  - Public funding should come from the government, using cash or bonds carrying market terms and tailored to expected cashflows.
  - If bonds are used, they should carry market rates of return and have similar characteristics to tradable government debt to ensure comparable market liquidity and access to central bank funding.
  - Bond maturities should be aligned to expected periods of positive cashflow.
  - The AMC’s equity position should provide sufficient capacity to absorb losses (capital), especially early in the AMC’s life before revenue streams materialize.
  - Central banks should avoid directly funding AMCs or permanently guaranteeing AMC debt because temporary state support of impaired loan portfolios is a fiscal, not a monetary, function.
- Governance, transparency, and operational objectives:
  - Sound governance, arm’s‑length oversight, transparency, and accountability are critical.
  - AMCs need a clear mandate, resources, and independence to maximize recoveries.
  - Political considerations (for example, protecting particular sectors or homeowners) should not interfere with core business decisions and, if pursued, should be implemented via transparent, well‑targeted subsidies and programs.
  - Board members and management should have relevant expertise and independence; external audits and regular reporting to parliament are recommended.
  - The operational objective should be to maximize recovery value within a predefined lifespan.
  - AMCs should be established with predetermined lifetimes or “sunset” clauses, for example, 5 to 10 years.
  - To mitigate moral hazard risks, the AMC should buy assets for a limited time (for example, the first six months to one year of its existence).

### Box 1: Advantages, costs, and risks of state‑sponsored, centralized AMCs
- Potential advantages:
  - Enables NPL resolution strategies that avoid abrupt asset sales, reduce immediate public losses, and preserve potential upside gains.
  - Allows banks to refocus on core business and accelerates private credit recovery.
  - Optimizes debt recovery strategies by providing economies of scale and cost savings; pooling assets for securitization or marketing; boosting bargaining power by consolidating loans and breaking creditor‑debtor links.
  - Professionalizes distressed asset management by centralizing scarce expertise, IT, and human resources; jump‑starting distressed debt markets and the NPL servicing industry; setting benchmark prices and standard procedures for workouts and asset sales.
  - Promotes sounder and uniform practices on valuation of distressed assets—imposing realistic transfer prices (if well designed) and ensuring periodic re‑valuation.
- Costs and risks:
  - High uncertainty around transfer pricing amid information asymmetries, financial stability turmoil, and shrinking fiscal space; authorities may overvalue NPLs due to optimistic macroeconomic estimates.
  - High vulnerability to downside risks: large AMC balance sheets, high operating costs, and financial leverage mean adverse shocks can cause heavy losses.
  - High set‑up costs and operational complexity (asset migration, IT systems, first valuation, staff recruitment, tax costs).
  - Political interference and reputational risks that can undermine management independence and hinder timely disposal of assets; exposure to social and political pressures advocating for debtors.
  - High operational risks if skilled professionals and an efficient NPL servicing industry are lacking; limited borrower or collateral information can hamper decisions; perverse incentives to prolong AMC operations.
  - Moral hazard risks for bank shareholders and managers if transfers are made on favorable terms and AMCs become (semi‑)permanent.

### Introduction: role of banks, supervisors, and when AMCs may be appropriate
- Banks’ internal credit risk management and effective supervision are the first line of defense against deteriorating credit quality.
  - Supervisors should require adequate loan loss provisions and effective NPL resolution strategies.
  - Managing NPLs in house helps mitigate moral hazard and strengthens banks’ capabilities (training, appraisal discipline, remuneration alignment).
- Purpose of centralized AMCs:
  - Used to relieve systemic pressures when banks carry excessive NPLs or other distressed assets.
  - Different from private distressed asset managers: AMCs are established to facilitate more efficient management and disposal of NPLs and often involve state sponsorship.
- State‑sponsored AMCs:
  - Typically fully or partly owned and funded by the government or another public agency; establishment usually requires ad hoc legislation or regulations.
  - Centralized AMCs source assets from several banks and may purchase assets from all banks in the system or a targeted group (examples: Danaharta, NAMA, SAREB, RTC).
  - Centralized AMCs are often state‑funded because financial risks and funding challenges can deter private owners in a crisis.
  - Decentralized AMCs are rarer and were used in specific historical cases (for example, China after the Asian financial crisis; StabFund and Maiden Lane vehicles during the global financial crisis).
- International standard context:
  - The Financial Stability Board’s Key Attributes includes powers for a resolution authority to establish and run asset management vehicles and transfer selected assets and legal rights to them for management and run‑down.

*Source: tnmea2024004 - Preface (Technical note chapter/section).*

### BOX 2. Taxonomy of Approaches for Managing Nonperforming Loans

### BOX 2. Taxonomy of Approaches for Managing Nonperforming Loans

### Taxonomy overview
- Management choices depend on: (1) public or private involvement, and (2) whether NPLs will be managed in a centralized manner or not.
- Four broad arrangements (quadrants):
  - Bottom left: Impaired assets transferred to a workout unit or special purpose vehicle (SPV) of the originating bank. Requires operational capacity, expertise, systems for recognizing NPLs, provisioning, prudent collateral valuation, debt collection (recoveries or foreclosures), managing foreclosed assets, and writing off NPLs.
  - Top left: Several banks pool NPLs into a privately owned asset management company (AMC) or SPV for collective management and a joint servicing platform. Cooperative private AMCs have been rare.
  - Bottom right: Authorities set up SPVs on a case-by-case basis to manage assets of individual failed banks.
  - Top right: A publicly owned, centralized AMC set up by the authorities to purchase NPLs from banks and manage them collectively. Covers both going-concern banks under private ownership and failing entities subject to resolution or public support (for example, divest NPLs). Example cited: the Resolution Trust Corporation in the United States during the savings and loans crisis.

### Preconditions for establishing a state-sponsored centralized AMC
- Decision should be guided by a rigorous analysis of banks’ NPL portfolios, market and macroeconomic context, and transparent assessment of AMC costs, risks, and public interest.
- State-sponsored AMCs are typically warranted only in exceptional circumstances of systemic financial crisis with unmanageable levels of NPLs across the banking system.
- Historical threshold observation: in most state-sponsored AMCs established between 1989 and 2022 (for which information is available), the banks’ book value of distressed assets transferred to the AMC represented more than 5 percent of GDP; among these:
  - half remained below 10 percent of GDP,
  - one-third surpassed 10 percent of GDP,
  - nearly a handful reached more than 20 percent of GDP.
- Critical preconditions and risks:
  - Realistic assumptions about asset values, economic outlook, and asset price recovery are essential; unrealistic assumptions lead to ill-designed policy choices and higher long-term costs.
  - Authorities must be committed to recognition and fair allocation of losses in the face of vested interests (managers, shareholders, supervisors, governments).
  - Reliable accounting practices, adequate supervision, an independent asset quality review, robust auditing, and a resolution authority with adequate tools and powers are necessary.
  - Sufficient operational capacity (qualified staff, IT systems, outsourced services) is needed; at inception, many jurisdictions may lack a developed NPL servicing industry.
  - Effective corporate insolvency and debt resolution frameworks, reliable borrower information, clean titles, and accurate collateral identification are critical; endowing AMCs with special legal privileges to circumvent deficiencies should be avoided.

### Scope of eligible institutions
- AMCs can be used to:
  - manage distressed assets of failing banks in resolution or liquidation,
  - manage assets of banks recapitalized with public sector support,
  - clean up balance sheets of going-concern banks that remain under private sector management and control.
- Distinct challenges by scenario:
  - When used as a resolution tool (in conjunction with bail-in or other tools), a centralized AMC may be appropriate when problems are systemic and concentrated across failing banks.
  - For going-concern banks, challenges include determining transfer price and securing voluntary participation; higher risk that banks may not participate or that transfer prices are set too high, increasing fiscal costs and moral hazard.
- Considerations on scope:
  - Include subsidiaries of foreign banks under the same financial-stability criteria as domestic banks to avoid discrimination.
  - Consider inclusion of nonbanks based on systemic importance, asset exposure, and supervisory robustness.
  - Historical note: Nonbank financial institutions have rarely been in the scope of past AMCs; KAMCO (Korea) is an example able to acquire NPLs from both banks and nonbanks.

### Scale and nature of distressed assets
- AMC efficiency gains depend on characteristics and scale of assets:
  - Centralized management can consolidate claims against the same borrowers and increase bargaining power and recovery value, particularly when borrowers have secured loans from multiple banks.
  - AMCs need sufficient scale to operate efficiently; distressed assets should be significant in the banking system to justify centralized management.
  - Assets suited to AMCs: big-ticket loans, corporate loans, loans backed by real estate collateral.
  - Assets less suited: small and unsecured loans, loans that depend primarily on borrower performance (originating banks may be better placed to manage these).
  - Each eligible loan should have a minimum critical size to ensure recovery-process efficiency.
  - A centralized AMC is more beneficial where asset values are highly uncertain.
- Centralization can attract scarce recovery expertise and bring efficiency gains when distressed assets are relatively homogenous.

### Fiscal costs and funding risks
- Fiscal exposures:
  - Gross fiscal costs of operating an AMC can be substantial; net fiscal costs depend on recoveries and financial returns versus the agreed transfer price.
  - Additional fiscal drivers: opportunity cost of public capital if not recovered on a risk-adjusted basis; funding required for purchasing loans (typically AMC bonds guaranteed by the sovereign, creating contingent liabilities); interest on AMC bonds (normally market-priced to be eligible as central bank collateral); AMC set-up and operating costs (salaries, facilities, insurance, taxes, legal fees).
- Historical repayment outcomes:
  - Out of the cases described in Annex 1 with sufficient information, only half of centralized AMCs were able to fully repay all the funding initially granted.
  - In some instances, a portion of the debt initially issued by the AMC was later converted into government debt (example: KAMCO in Korea).
- Policy implication:
  - Net fiscal costs can vary significantly and often materialize years after initial funding; potential benefits must be assessed over the AMC’s expected lifetime.
  - A centralized AMC may be most useful when a widespread incidence of distressed assets risks long-term damage to credit intermediation, bank viability, credit growth, and economic recovery.
  - If losses are not adequately identified and first allocated to private shareholders and creditors, an AMC may shift losses and risks to the state rather than addressing a market failure.

*Source: IMF staff.*

### BOX 3. The Market Failure Rationale for Using Centralized Asset Management Companies

### BOX 3. The Market Failure Rationale for Using Centralized Asset Management Companies

### Market failure rationale and AMC role
- Banks have short-term liabilities (deposits) and longer maturity assets; deposit runs can force banks to sell risky assets into thin markets, triggering "fire sale" prices significantly below balance sheet value and potentially below real economic value (the [discounted] future cashflows they would generate).
- An AMC purchases nonperforming loans (NPLs) to remove uncertainty around bank exposures (valuation and size of losses) and mitigate the risk of second-round effects, including banks contracting lending and deepening the economic shock.
- By purchasing impaired assets at price P*, the AMC can provide a floor on their valuation and potentially trigger a recovery in market liquidity for impaired assets.
- If impaired assets are purchased at a price equivalent to their real economic value, the AMC may not lose money and could capture upside if the economic recovery is robust.
- Practical constraint: pricing uncertainties are usually extreme; if P* is significantly below banks’ book value, banks will be unwilling to sell (risking insolvency), which often associates state-sponsored AMCs with insolvent entities where authorities can impose transfers at P*.
- Countervailing risk: purchasing NPLs at higher prices transfers losses to the state and creates moral hazard by bailing out shareholders and creditors; large mispricing and volumes transferred can jeopardize sovereign debt sustainability.

### Alternatives, timing, and sequence of interventions
- Alternatives to AMCs include:
  - Bail-in of eligible creditors that will absorb losses together with shareholders.
  - Partial transfer of performing assets and protected liabilities to other healthy banks.
  - Establishment of a temporary bridge bank to allow restructuring before sale.
- State-supported securitization schemes and asset guarantees are alternative strategies with distinct challenges (transfer of risk to new investors can be limited; guarantees are temporary and leave upside with banks).
- Timing considerations:
  - AMCs are best deployed after containment efforts in a systemic crisis.
  - Establishing an AMC during the initial phase can increase state risks and costs because negotiating transfer prices and sharing risks with private investors is harder amid flight and uncertainty.
  - Steps to operationalize an AMC include legal framework approval, funding and capital, prudent valuation, staff recruitment; these take time.
- Authorities should aim to minimize fiscal costs and use public money only as a last resort; AMCs can be combined with other resolution tools when dealing with nonviable banks.

### Moral hazard and limits on AMC operations
- Risk-shifting effects:
  - The possibility of transferring NPLs to an AMC can weaken banks’ risk management, underwriting discipline, and provisioning.
  - Public ownership of an AMC can weaken borrowers’ incentives to repay and may erode payment discipline, especially for retail mortgages and SMEs.
- Measures to limit moral hazard:
  - Limit AMC asset purchase windows in time (example: the first six months of existence).
  - Prevent opportunistic cherry-picking and asset reclassifications; execute transfers promptly once scope and price are defined.
  - Avoid open-ended repurchase (call/put) options that prevent a clean break for accounting and supervisory purposes.
  - Include transfer and dispute-resolution mechanisms in contracts (prefer out-of-court or arbitration for speed).
  - AMCs should have a sunset clause; typical lifespan experience: between 5 to 15 years, though many AMCs exceeded or extended their clauses.
    - Among the sample of AMCs covered in Annex 1, nearly two-thirds had a sunset clause, but only a handful met it.
    - 13 out of 30 AMCs were provided with special powers in the sample.
    - In total, more than 40 percent of the AMCs were still in operation at the end of 2022.

### Design: mandate, transferred assets, valuation and transfer price
- Mandate:
  - Should be clearly defined by law and focus on prudent valuation and maximizing asset recovery values within the AMC time horizon.
  - Should include regular disposal targets and be framed to reduce fiscal risk, incentivize restructuring and debt workouts, free collateral for new purposes, enhance transparency and accountability, insulate from political pressures, and attract skilled staff with market-based compensation.
  - Unclear or competing objectives reduce effectiveness; commercially oriented mandate requires governance and compensation aligned with commercial purpose.
- Transferred assets:
  - Legislation should set asset eligibility and whether transfers are mandatory.
  - Transferring entire portfolios within each typology is preferable to exploit economies of scale and avoid cherry-picking, subject to cost and circumstances of selling banks.
- Valuation and transfer price:
  - Critical distinction among three valuations: book value (accounting), market value (cyclical/structural), and economic value (discounted cashflows over a longer, less procyclical horizon).
  - Markets for distressed assets are often thin; AMCs should estimate real economic value using prudent macroeconomic assumptions and incorporate funding and operating costs.
  - A high transfer price substantially increases fiscal costs and risks; more than half of AMCs in the sample (including Colombia, El Salvador, Finland, and the first batch transferred in China) received distressed assets at the banks’ book value (100 percent transfer price).
  - Only five AMCs in the sample with sufficient information achieved a recovery ratio above 50 percent of banks’ book value.
  - Excessively low transfer prices are also detrimental: they inflate recapitalization needs and risk further instability.
  - Valuations should follow market principles, international valuation standards, include uniform methodology across asset classes, be frequent and updated, and use the AMC’s revalued starting balance sheet to measure performance rather than purchase prices.
  - Supervisors could introduce time-bound collateral haircuts based on collateral type and time past due.

### Funding and capital structure
- Funding:
  - Government funding (cash or instruments convertible to cash) is preferred: (1) direct cash injection; (2) AMC issuing government-guaranteed bonds exchanged for assets; (3) giving government bonds to AMC to pay transferred assets.
  - Government-guaranteed AMC bonds should have an explicit and credible guarantee, be tradable and listed, meet collateral requirements for central bank liquidity, and have sufficient tenors to match the AMC timeframe; small or highly indebted sovereigns may lack a market for such bonds.
  - Limitations: liquidity relief from government-guaranteed AMC bonds may be partial due to collateral valuation sensitivity, central bank refinancing rules, wholesale market reluctance, and below-market coupons affecting banks’ profitability and collateral eligibility.
  - Central bank funding is not recommended except as a temporary urgent measure subject to government indemnity, because it risks central bank independence.
  - Use of deposit insurance system (DIS) resources for AMC funding is generally not recommended except in limited liquidation contexts.
- Liability structure:
  - Should reflect expected cashflows and risks; AMC should estimate timelines and adjust maturity and currency composition to avoid large refinancing needs.
  - AMC should pay market interest rates for funding; include some pure market funding (no guarantees) as a benchmark.
- Capital:
  - AMC should start with sufficient capital to absorb early losses; capitalization should be commensurate with high financial risks but allow leverage to acquire large portfolios.
  - Caps on AMC leverage are useful safeguards to avoid bloated entities (example: Eastern Caribbean Asset Management Corporation could only issue debt eight times its equity).
  - Equity may include subordinated debt but high-quality capital should absorb losses; subordinated instruments often align maturities with the AMC lifespan; early termination windows (example: five years) can allow capital structure adjustment.
  - Cost of capital should be aligned with performance by linking dividends and subordinated payments to recoveries and net income.
  - Ownership forms vary from full state ownership to public-private partnerships; state participation is typically required after systemic crises, but private investor participation can bring expertise and commercial focus.
  - Risks of thin capital with sovereign-funded liabilities: sovereign bears most risk despite private control.
  - Examples: SAREB’s financing targeted equity and subordinated debt representing at least 8 percent of total assets in design (Spain); other country experiences vary.

### Governance, independence, transparency, and operations
- Governance and decision-making:
  - Owners should set mission and high-level objectives and appoint oversight bodies.
  - Optional supervisory board can advise and monitor without decision powers.
  - Board of directors should oversee management, set policies, appoint executives, and determine risk appetite; board committees should include audit (and compliance), remuneration, and potentially nominations and investments committees.
  - Internal controls, conduct and ethics codes, conflict-of-interest disclosures, and direct reporting lines for compliance and internal audit are necessary.
- Organization and remuneration:
  - Organizational structure should reflect mandate, business plan, and sunset clause; typical functional lines: credit management/recovery and asset management (industrial approaches).
  - Remuneration should be market-based and performance-linked to maximize recovery value in a timely manner while guarding against perverse incentives to rapidly dispose of assets for bonuses.
- Independence and legal framework:
  - AMC should be a separate legal entity at arm’s length from government with professional autonomy; legislative establishment is preferable to secure independence.
  - Fit-and-proper tests for board nominees; removal conditions should be stipulated in law.
  - Liability protections can be via insurance (directors’ and officers’) or legal indemnities in some jurisdictions.
  - Operational and budgetary independence is important; AMC should maintain its own budget and staffing, separate operating budget from asset purchase funding, and be able to hire advisors and set valuation policies.
- Transparency, accountability, and oversight:
  - Full, accurate, and timely public disclosure is essential: externally audited and published quarterly and annual financial statements using internationally accepted accounting standards (for example, IFRS or same as banks).
  - External auditors should be independent and rotate periodically (example: every three years).
  - AMC should report to parliament and/or national public auditor; finance ministries often oversee AMC performance and business plans; resolution authorities typically lead oversight when AMCs are used in bank resolution.
- Operations and servicing:
  - A sound business plan must define mix of sale, investment, and holding strategies consistent with mandate, risk appetite, and lifespan.
  - Loan servicing options: retained by originating banks (short-term), in-house (requires IT and personnel investment), or outsourced (access to specialist platforms but requires careful contract design).
  - Proactive portfolio strategies should avoid warehousing; include property services, restructuring, legal actions, and realistic write-offs.
  - Strong risk management and controls are required to address exogenous and operational risks (fraud, legal liabilities, reputational risk, data loss, staff churn).

### Conclusion and policy guidance
- AMCs are not a panacea; their creation should be a last resort after assessing benefits, costs, and risks and after exploring alternatives to manage systemic crises.
- Preconditions before establishing an AMC:
  - Commitment to recognizing and fairly allocating losses.
  - Addressing legal, institutional, regulatory, and market shortcomings for NPL management.
  - Realistic assessment of risks and costs the AMC will entail.
- If used, a centralized AMC should be part of a comprehensive NPL strategy including legal and insolvency reforms, alternatives for distressed assets not suitable for transfer, and resolution of nonviable banks with losses shared among shareholders and creditors.
- Establishing a fair transfer price is critical; transfer pricing must estimate real economic value and incorporate significant costs and risks—otherwise the AMC defers losses to the taxpayer.
- Running an AMC with clear mandate and sound governance mitigates but does not eliminate high risks: operational complexity, costly setup, potential for large public losses, and sensitivity to macroeconomic deviations or legal/strategic mistakes.
- Past experience indicates many AMCs ultimately led to significant taxpayer costs when assessed over their full lifespans; policymakers must weigh these risks against the economic costs of leaving systemic NPL overhangs in the banking system.

*Source: IMF staff (BOX 3 text from tnmea2024004).*

### Annex 1. Key Aspects of Centralized State-

### Annex 1. Key Aspects of Centralized State-Sponsored Asset Management Companies

### Overview
- Covers key characteristics of state-sponsored AMCs established between 1989 and 2022 across the membership of the IMF.  
- Total cases included in this annex: 30.
- Focus: centralized state-sponsored AMCs; excludes decentralized AMCs in Angola, Azerbaijan, Belgium, Cyprus, Germany, Italy, Switzerland, and the United States, except China, Finland, Kazakhstan, and Sweden (decentralized AMCs reached systemic dimension in those countries).
- Some included vehicles have broader powers beyond asset management (restructuring, recapitalization, deposit insurance): Ghana, Indonesia, Jamaica, Mexico, Türkiye, and the United States.
- Organization: by regions — Africa; Asia and the Middle East; Europe; Western Hemisphere.

### Africa — Selected centralized AMC case highlights
- Burkina Faso — Bureau de Recouvrement des Crédits du Burkina (BRCB)
  - Ownership: Fully owned by the government.
  - Total funding / means: Government bonds, budgetary allocations, financing from multilateral development banks.
  - Size of distressed assets transferred: CFAF 64.4 billion (6.5 percent of GDP).
  - Recoveries: CFAF 10.8 billion; Recovery rate: 16.8 percent.
  - Eligible loans: Nonperforming loans (NPLs).
  - Year of creation: 1991. Ceased operations in 2002.

- Ghana — Non-Performing Assets Recovery Trust (NPART)
  - Ownership: Fully owned by the government.
  - Size of distressed assets transferred: GHS 59 billion (1.2 percent of GDP).
  - Recoveries: GHS 19.6 billion; Recovery rate: 33.2 percent.
  - Average transfer price: 100 percent as it assumed the assets at book value.
  - Wider mandate: Powers to restructure and recapitalize state owned banks.
  - Eligible loans: NPLs, many granted to state-owned enterprises.
  - The 250 largest loans represented almost 90 percent of transferred assets.
  - Year of creation: 1990. Predefined lifespan: Five years (not met). Ceased operations in 1997.

- Nigeria — Asset Management Corporation of Nigeria (AMCON)
  - Ownership: Owned by the central bank and the Ministry of Finance (50 percent each); CEO and majority of board selected by the central bank.
  - Capital issued: NGN 10 billion.
  - Total funding and means: NGN 5.5 trillion from state-guaranteed bonds issued by the AMC (zero-coupon bonds issued in several tranches later redeemed by the central bank). In 2011, a resolution fund with target NGN 1.5 trillion created with annual contributions (10 years) from the central bank (0.5 trillion) and banks (1 trillion).
  - Outstanding debt: NGN 4.7 trillion owed to the central bank (2023) (85.5 percent of initial funding).
  - Size of distressed assets transferred: NGN 4.02 trillion (7.2 percent of GDP).
  - Recoveries and recovery rate: NGN 1.6 trillion (2023); Recovery rate: 34.3 percent.
  - Average transfer price: 43.8 percent (NGN 1.76 trillion/NGN 4.02 trillion). This figure excludes costs of bank recapitalizations (which amounted to another NGN 2.3 trillion).
  - Wider mandate: Assumed mandate to recapitalize banks, injecting capital in eight out of ten failing banks. It also purchased three bridge banks.
  - Eligible loans: Corporate loans (mainly oil and gas related and others such as aviation), mortgages, loans secured by shares, and unsecured loans.
  - Mandatory transfer: Indirectly, since banks were not allowed to have a NPL ratio of more than 5 percent.
  - Large loans transferred: 77 percent of loans transferred were valued above NGN 1 billion.
  - Participating institutions: All banks (22 out of a total of 24 banks in the system transferred assets to the AMC).
  - Special powers: Yes (for example, seize borrowers’ assets, or appoint a special administrator).
  - Year of creation: July 2010. Predefined lifespan: No. Still in operation.

- Senegal — Société Nationale de Recouvrement (SNR)
  - Ownership: Fully owned by the government.
  - Capital issued: CFAF 25 million.
  - Total funding / means: Deposits from failing banks were transferred to the AMC with the intention to reimburse them with proceeds from recoveries.
  - Size of distressed assets transferred: CFAF 144 billion (7.3 percent of GDP).
  - Recoveries: CFAF 62 billion; Recovery rate: 43.1 percent.
  - Average transfer price: 100 percent, as it assumed the assets at book value; assumed all assets and liabilities from selected failing institutions.
  - Eligible loans: NPLs.
  - Mandatory transfer: Yes, in practice. NPLs of liquidated banks were transferred together with certain liabilities.
  - Participating institutions: Closed banks only. Seven failing banks, five state-owned.
  - Year of creation: February 1991. Predefined lifespan: Set at 99 years (not in practice). Still in operation as of end-2022.

- Tanzania — Loans and Advances Realization Trust (LART)
  - Ownership: Fully owned by the government (central bank ownership indicated elsewhere).
  - Capital issued: n.a.
  - Total funding / means: Government bonds.
  - Size of distressed assets transferred: TZS 85 billion (6.4 percent of GDP).
  - Recoveries: TZS 33 billion; Recovery rate: 38.8 percent.
  - Eligible loans: NPLs (mostly commercial loans to state-owned enterprises).
  - Mandatory transfer: Yes.
  - Special features: A special court was created to deal with NPLs transferred to the AMC.
  - Year of creation: June 1991. Predefined lifespan: Initial five years; Revised: nine years (met). Ceased operations in January 2001.

- Zimbabwe — Zimbabwe Asset Management Corporation (ZAMCO)
  - Ownership: Fully owned by the central bank.
  - Capital issued: USD 1 million.
  - Total funding / means: USD 1.18 billion (government bonds). No outstanding debt as repaid in full (2021).
  - Size of distressed assets transferred: USD 768 million (2020).
  - Total amount paid: USD 1.13 billion.
  - Eligible loans: NPLs.
  - Mandatory transfer: No.
  - Participating institutions: Open banks only.
  - Year of creation: July 2014. Predefined lifespan: Ten years. Still in operation but winding down operations.

### Asia and the Middle East — Selected centralized AMC case highlights
- China — The big four AMCs: Cinda, Great Wall, Huarong, and Orient
  - Ownership: Fully owned by the government.
  - Capital issued: CNY 40 billion (CNY 10 billion per AMC).
  - Total funding and means: CNY 1.4 trillion: CNY 0.84 trillion in bonds issued by the AMCs; CNY 0.56 trillion of credit lines from the Central Bank.
  - Size of distressed assets transferred: CNY 1.4 trillion (initial transfers in 1999, 2000) (15.5 percent of GDP).
  - Recoveries: CNY 0.21 trillion (15.0 percent).
  - Average transfer price: 100 percent for the initial transfers (CNY RMB 1.4 trillion), which were made at book value.
  - Wider mandate: Mandate also included restructuring state-owned enterprises.
  - Eligible loans: NPLs (mainly from policy lending) and shares in 580 distressed state-owned enterprises from debt-equity swaps. Almost half of transferred assets related to manufacturing industry.
  - Structure: One AMC established for each of the big four systemic banks.
  - Year of creation: April–October 1999. Predefined lifespan: Ten years. Still in operation; operations expanded into complex financial conglomerates.

- Indonesia — Indonesian Bank Restructuring Agency (IBRA)
  - Ownership: Fully owned by the government. IBRA had an asset management unit.
  - Total funding / means: IDR 654 trillion in government bonds, most (IDR 431 trillion) issued to recapitalize banks (recap bonds).
  - Size of distressed assets transferred: IDR 645 trillion (55.8 percent of GDP).
  - Recoveries: IDR 151 trillion; Recovery rate: 23.4 percent.
  - Average transfer price: 100 percent in practice. Assets transferred at book value after issuing a full guarantee on depositors and senior creditors for banks recapitalized or liquidated by IBRA.
  - Wider mandate: Broad powers to restructure and resolve banks.
  - Eligible loans: Loans from failing and recapitalized banks. Around half of transferred loans were denominated in foreign currency.
  - Mandatory transfer: Yes, in practice, as IBRA took control of assets of banks it liquidated or recapitalized at book value.
  - Large loans transferred: Corporate loans with face value of at least IDR 50 billion comprised the most significant portion.
  - Participating institutions: 52 failing and recapitalized banks.
  - Special powers: Yes (for example, transfer assets without borrowers’ permission or seize assets without court approval).
  - Year of creation: February 1998. Predefined lifespan: Six years. Closed down in 2004; remaining assets and liabilities transferred to the Ministry of Finance.

- Japan — Resolution and Collection Corporation (RCC)
  - Ownership: Fully owned by the Deposit Insurance Corporation.
  - Capital issued: JPY 12 billion.
  - Total funding / means: State-guaranteed bonds issued by the Deposit Insurance Corporation.
  - Outstanding debt: JPY 0.54 trillion (2022).
  - Size of distressed assets transferred: JPY 34.9 trillion (6.6 percent of GDP).
  - Recoveries: JPY 10.2 trillion; Recovery rate: 29.2 percent.
  - Average transfer price: 27.7 percent (JPY 9.66 trillion/JPY 34.88 trillion).
  - Wider mandate: No at creation; in 2011 entrusted with a wider mandate (for example, to establish bridge banks).
  - Eligible loans: NPLs, mainly real estate and corporate loans.
  - Mandatory transfer: Only for failing institutions, not for solvent ones.
  - Participating institutions: All Japanese credit institutions (both solvent and failing).
  - Year of creation: April 1999. Predefined lifespan: No. Still in operation.

- Kazakhstan — Rehabilitation Bank, Agricultural Support Fund, and Exim Bank
  - Ownership: Initially owned by the central bank; later owned by the Ministry of Finance since 2003.
  - Total funding: USD 45 million from a World Bank loan.
  - Size of distressed assets transferred: USD 42 million (2.3 percent of GDP).
  - Mandate: Liquidation and bank restructuring powers.
  - Eligible loans: NPLs.
  - Mandatory transfer: Yes.
  - Participating institutions: Four state-owned banks, eight commercial banks.
  - Year of creation: 1996. Predefined lifespan: Three years. Still in operation as of end-2022.

- Malaysia — Danaharta
  - Ownership: Initially a government agency; converted to department of the Ministry of Finance (2000) and state-owned enterprise (2002).
  - Capital issued: No capital issued.
  - Total funding / means: USD 64.4 million in total: USD 29.4 million from government bonds; USD 35 million from an Asian Development Bank loan.
  - Size of distressed assets transferred: USD 35 million (3.0 percent of GDP).
  - Recoveries: USD 5 million; Recovery rate: 14.3 percent.
  - Eligible loans: NPLs.
  - Mandatory transfer: Only mandatory for banks receiving public recapitalization or with NPL ratios above 10 percent.
  - Year of creation and lifespan details: see annex (specific years not provided in excerpt).

- Mongolia — Mongolian Asset Recovery Agency (MARA)
  - Total funding / means: n.a.
  - Size of distressed assets transferred: n.a.
  - Recoveries: n.a.
  - Eligible loans: NPLs.
  - Mandatory transfer: Yes.
  - Loan composition: Only 30 percent of loans were corporate loans; remainder were loans to individuals.
  - Participating institutions: Two failing banks (People’s Bank and Insurance Bank).
  - Special powers: Yes, expedited access to courts.
  - Year of creation: January 1997. Predefined lifespan: Three years. Ceased operations in 2005.

- Republic of Korea — (one AMC described)
  - Ownership evolution: In 1999, 42.8 percent owned by the government; 28.6 owned by one state-owned bank; 28.6 owned by other financial institutions. In 2023, 87.6 percent owned by the government, 9.7 percent owned by one state-owned bank, and 2.7 percent owned by other financial institutions.
  - Capital issued: KRW 1 trillion (in 1999) (KRW 2.9 trillion at the end of 2023).
  - Total funding and means: KRW 21.5 trillion: KRW 20.5 trillion of state-guaranteed bonds; KRW 0.5 trillion from the state-owned bank; KRW 0.5 trillion from other financial institutions.
  - Outstanding debt: n.a. A portion of the AMC bonds were converted into government bonds.
  - Size of distressed assets transferred: KRW 106.2 trillion (18.0 percent of GDP).
  - Recoveries: KRW 46.1 trillion; Recovery rate: 43.4 percent.

*Source: tnmea2024004 - Annex 1. Key Aspects of Centralized State-Sponsored Asset Management Companies (IMF).*

### 36.3 percent

### 36.3 percent

### Korea Asset Management Corporation (KAMCO)
- Region/Country: Asia and Middle East / Korea
- Ownership: Fully owned by the central bank (through the Financial Institutions Development Fund) but the chairperson and board members were appointed by the Ministry of Finance
- Capital Issued: KRW 38.5 trillion / KRW 106.2 trillion (presented as "36.3 percent" heading context)
- Total Funding and Means of Funding by the AMC: The AMC also bought bonds issued by the industrial group Daewoo
- Eligible Assets: NPLs from commercial banks (56 percent of book value); bonds issued by Daewoo (32 percent) and NPLs from nonbank financial institutions, such as insurers (remaining 12 percent)
- Mandatory Transfer: No
- Large Loans Transferred: 90 percent of the loans belonged to 1 percent of borrowers
- Participating Financial Institutions: All institutions, including gone and going-concern credit institutions as well as nonbank financial institutions (for example, insurers)
- Special Powers: No, but it had special privileges (for example, exemption from financial transactions tax)
- Year of Creation: NPL Fund was created in November 1997
- Predefined Lifespan: Not initially. Revised: 15 years
- Still in Operation?: No, its NPL Fund was liquidated in November 2012. However, the AMC still exists and the KAMCO Act was revised in 2012 to allow the AMC to acquire corporate NPLs directly

### Thai Asset Management Corporation (TAMC)
- Region/Country: Asia and Middle East / Thailand
- Ownership: Fully owned by the central bank (through the Financial Institutions Development Fund)
- Capital Issued: THB 1 billion
- Total Funding and Means of Funding by the AMC: THB 231 billion issuance of 10-year bonds by the AMC and guaranteed by the Financial Institutions Development Fund (owned by the central bank)
- Outstanding Debt: n.a.
- Size of Distressed Assets Transferred: THB 780 billion (14.6 percent of GDP)
- Recoveries and Recovery Rate over Banks’ Book Value of Transferred Assets: 34.0 percent (THB 265 billion/THB 780 billion)
- Eligible Loans: NPLs (mainly manufacturing and real estate loans)
- Mandatory Transfer: Yes, for state-owned banks and for state-owned decentralized AMCs (circa 80 percent of NPLs transferred); voluntary for privately owned banks
- Large Loans Transferred: Loans were relatively large, and most of them were multicreditor loans
- Participating Financial Institutions: Credit institutions and decentralized AMCs that had been previously created
- Special Powers: Yes (for example, special out of court restructuring powers without debtor’s consent)
- Year of Creation: June 2001
- Predefined Lifespan: 12 years
- Still in Operation?: No, it closed in June 2013

### Vietnam Asset Management Company (VAMC)
- Region/Country: Asia and Middle East / Vietnam
- Ownership: Fully owned by the central bank
- Capital Issued: Initial: VND 500 billion; Revised: VND 2 trillion, years after
- Total Funding and Means of Funding by the AMC: Several issuances of special bonds to fund the purchase of NPLs over the years. These bonds had a 5-year maturity, then extended to 10-year maturity (in 2015)
- Outstanding Debt: n.a.
- Size of Distressed Assets Transferred: Purchased NPLs amounted to VND 375 trillion as of December 2020
- Recoveries and Recovery Rate over Banks’ Book Value of Transferred Assets: n.a.
- Eligible Loans: NPLs
- Mandatory Transfer: Yes, for banks with an NPL ratio above 3 percent
- Large Loans Transferred: n.a.
- Participating Financial Institutions: Domestic credit institutions
- Special Powers: No
- Year of Creation: May 2013
- Predefined Lifespan: No
- Still in Operation?: Yes

### Arsenal (Finland)
- Region/Country: Europe / Finland
- Ownership: Fully owned by the government - 74 percent owned directly, 26 percent through the Government Guarantee Fund
- Capital Issued: FIM 3.5 billion
- Total Funding and Means of Funding by the AMC: FIM 20.6 billion; mainly state-guaranteed short-term bonds issued by Arsenal
- Outstanding Debt: n.a.
- Size of Distressed Assets Transferred: FIM 42.9 billion (8.0 percent of GDP)
- Recoveries and Recovery Rate over Banks’ Book Value of Transferred Assets: Arsenal reported significant losses (FIM 18 billion)
- Average Transfer Price / Recoveries: 100 percent, as it assumed the assets at book value
- Eligible Loans: NPLs, many of which were backed by real estate
- Mandatory Transfer: n.a.
- Large Loans Transferred: Arsenal bought failing banks and decentralized AMCs
- Participating Financial Institutions: Initially created for one bank resulting from the merger of 41 savings banks (Savings Bank) and later expanded to other problem banks and decentralized AMCs
- Special Powers: No
- Year of Creation: November 1993
- Predefined Lifespan: No
- Still in Operation?: No. It was put under liquidation in 2003 but continued until recently with some marginal operations

### Magyar Reorganizációs és Követeléskezelő (MARK) (Hungary)
- Region/Country: Europe / Hungary
- Ownership: Initially owned by the central bank. Privatized soon after in June 2017, as a result of the EU Treaty prohibition of monetary financing. No assets have been transferred into the AMC’s balance sheet, which operates solely as a trustee
- Capital Issued: n.a.
- Total Funding and Means of Funding by the AMC: Intended to be fully capitalized and funded by the central bank with up to HUF 300 billion
- Outstanding Debt: n.a.
- Size of Distressed Assets Transferred: n.a.
- Recoveries and Recovery Rate over Banks’ Book Value of Transferred Assets: n.a.
- Eligible Loans: Commercial real estate (NPLs and repossessed assets)
- Mandatory Transfer: No
- Large Loans Transferred: n.a.
- Participating Financial Institutions: Open to all credit institutions, including subsidiaries of foreign banks
- Special Powers: No
- Year of Creation: November 2014
- Predefined Lifespan: Ten years
- Still in Operation?: No. Privatized in June 2017

### National Asset Management Agency (NAMA) (Ireland)
- Region/Country: Europe / Ireland
- Ownership: NAMA held 49 percent of an SPV, with veto power over its decisions (shareholder agreement). Three private investors held 51 percent of the SPV
- Capital Issued: EUR 0.1 billion and EUR 1.6 billion of subordinated debt
- Total Funding and Means of Funding by the AMC: EUR 30.2 billion in senior bonds issued by the AMC with state guarantee (95 percent of transfer price)
- Outstanding Debt: No. Repaid in full since October 2017
- Size of Distressed Assets Transferred: EUR 74.0 billion (44.2 percent of GDP)
- Recoveries and Recovery Rate over Banks’ Book Value of Transferred Assets: EUR 47.4 billion (EUR 40.8 billion from assets and loans disposal; EUR 6.6 billion from other income) Recovery rate: 64.1 percent
- Average Transfer Price: 43.0 percent (EUR 31.8 billion/EUR 74.0 billion)
- Eligible Loans: Real estate loans, together with other loans provided to those borrowers, and associated derivatives
- Mandatory Transfer: No
- Large Loans Transferred: More than 75 percent of the transferred loans (in value by connection level) had a face value of at least EUR 100 million
- Participating Financial Institutions: Open to all credit institutions, including subsidiaries of foreign banks; five banks participated
- Special Powers: Yes (for example, to appoint a special administrator or compulsory rights of purchase)
- Year of Creation: December 2009
- Predefined Lifespan: Not formally. However, the initial plan was to liquidate assets in ten years, later extended to 16 years
- Still in Operation?: Yes

### Družba za Upravljanje Terjatev Bank (DUTB) (Slovenia)
- Region/Country: Europe / Slovenia
- Ownership: Fully owned by the government
- Capital Issued: EUR 0.2 billion
- Total Funding and Means of Funding by the AMC: EUR 1.93 billion - EUR 1.56 billion of state-guaranteed bonds issued by the AMC; EUR 0.37 billion of a loan granted by the Ministry of Finance
- Outstanding Debt: EUR 0.5 billion (2019) (25.9 percent of initial funding)
- Size of Distressed Assets Transferred: EUR 5.8 billion (2019) (15.9 percent of GDP)
- Recoveries and Recovery Rate over Banks’ Book Value of Transferred Assets: EUR 1.4 billion Recovery rate: 24.1 percent
- Average Transfer Price: 34.5 percent (EUR 2.0 billion/EUR 5.8 billion)
- Eligible Loans: Performing loans and NPLs from the largest banks
- Mandatory Transfer: Yes
- Large Loans Transferred: n.a.
- Participating Financial Institutions: Initially limited to the three largest state-owned banks and later expanded to other two smaller banks
- Special Powers: No
- Year of Creation: March 2013
- Predefined Lifespan: Initial: five years. Extended: ten years
- Still in Operation?: No. The AMC ceased to exist as a legal entity at the end of 2022 as it merged into the Slovenian Sovereign Holding, transferring to this government-owned entity all remaining assets and liabilities (fully repaid)

### Sociedad de Gestión de Activos Procedentes de la Reestructuración Bancaria (SAREB) (Spain)
- Region/Country: Europe / Spain
- Ownership: Initially, private financial institutions held 55 percent and the Spanish Executive Resolution Authority held 45 percent. Currently the Spanish Executive Resolution Authority owns 50.1 percent
- Capital Issued: EUR 1.2 billion and EUR 3.6 billion of subordinated debt
- Total Funding and Means of Funding by the AMC: EUR 50.8 billion State-guaranteed bonds issued by the AMC
- Outstanding Debt: EUR 30.5 billion (60.0 percent of initial funding)
- Size of Distressed Assets Transferred: EUR 107.1 billion (10.5 percent of GDP)
- Recoveries and Recovery Rate over Banks’ Book Value of Transferred Assets: EUR 32.5 billion (EUR 25.8 billion from assets and loans disposal; EUR 6.6 billion from other income) Recovery rate: 30.3 percent
- Average Transfer Price: 47.4 percent (EUR 50.78 billion/EUR 107.12 billion)
- Policy Note: In 2022, the AMC legal framework was modified to encourage asset disposal with social interest objectives, keeping the goal of maximizing assets value
- Eligible Loans: Real estate–related NPLs, foreclosed real estate, and majority shareholdings in troubled real estate companies
- Mandatory Transfer: Yes, only aimed at credit institutions that were subject to public recapitalization
- Large Loans Transferred: Minimum size to be eligible for transfer: EUR 250,000 for loans and EUR 100,000 for foreclosed assets
- Participating Financial Institutions: Eight credit institutions (of which, seven were savings banks)
- Special Powers: No
- Year of Creation: November 2012
- Predefined Lifespan: 15 years
- Still in Operation?: Yes

### Swedish AMCs (Securum and Retriva) — aggregated figures
- Ownership: Fully owned by the government
- Capital Issued: SEK 27.8 billion (SEK 24 billion for Securum and SEK 3.8 billion for Retriva)
- Total Funding and Means of Funding by the AMC: SEK 30.5 billion, of which SEK 13.5 billion state guaranteed
- Outstanding Debt: No, repaid in full. But only part of its capital was returned to the state (SEK 17.8 billion out of SEK 27.8 billion)
- Size of Distressed Assets Transferred: SEK 112 billion (6.3 percent of GDP)
- Recoveries and Recovery Rate over Banks’ Book Value of Transferred Assets: SEK 57 billion Recovery rate: 50.9 percent

*Technical Notes and Manuals — Content unit: tnmea2024004 - 36.3 percent*

### 58.9 percent (SEK 66 billion/SEK 112 billion)

### 58.9 percent (SEK 66 billion/SEK 112 billion)

### Europe — Sweden: Securum and Retriva
- Ownership: n.a.
- Eligible loans: Corporate and real estate loans with a minimum size of SEK 15 million (Securum) or SEK 5 million (Retriva)
- Transfer: Mandatory
- Large loans transferred: n.a.
- Participating financial institutions: Two banks (Nordbanken and Götabanken)
- Special powers: No, but they had a special privilege as they didn’t have to liquidate their collateral within three years (some credit institutions were also exempted from this requirement)
- Year of creation: 1993 and 1994, respectively. Later merged in May 1996
- Predefined lifespan: 10–15 years (met)
- Still in operation?: No. It was dissolved in June 1997

### Europe — Türkiye: Savings Deposit Insurance Fund (SDIF)
- Ownership: The SDIF is the deposit insurance fund, which, in 1999, was transferred from the central bank to the newly created Bank Regulation and Supervision Agency. Then, it created an asset management unit
- Capital issued: n.a.
- Total funding and means of funding by the AMC: USD 19 billion—USD 17 billion from budgetary allocation; USD 2 billion from the central bank
- Outstanding debt: No. In total, it repaid USD 8.5 billion. And the remaining debt (USD 10.5 billion owed to the government) was forgiven in 2008
- Size of distressed assets transferred: The total assets of the banks that went under the AMC’s administration were estimated at around USD 20 billion (around 7.3 percent of GDP)
- Recoveries and recovery rate over banks’ book value of transferred assets: USD 23.6 billion (cumulative recoveries as of the end of 2022 that also include recoveries from assets of other banks that failed in more recent years). Recovery rate: n.a.
- Average transfer price: 100 percent. It took control of failing banks, assuming all their NPLs at book value
- Wider mandate?: The SDIF is the deposit insurance fund and also responsible for resolving failing banks. As part of this wider mandate, it created an asset management unit
- Eligible loans: All the NPLs from the failing banks
- Transfer: Mandatory (Yes, in practice, because it took control of the failing banks)
- Large loans transferred: n.a.
- Participating financial institutions: 23 failed banks between 1999 and 2003
- Special powers: Yes (for example, NPLs from banks administered by the SDIF were designated as state receivables)
- Year of creation: December 1999
- Predefined lifespan: No
- Still in operation?: Yes

### Europe — United Kingdom: UK Asset Resolution Ltd. (UKAR)
- Ownership: Fully owned by the government
- Capital issued: n.a.
- Total funding and means of funding by the AMC: GBP 48.7 billion directly owed to the government (liabilities inherited from the two failing institutions)
- Outstanding debt: No, repaid in full as of May 2019
- Size of distressed assets transferred: GBP 116 billion (7.2 percent of GDP)
- Recoveries and recovery rate: n.a. but it reported a cumulative profit of circa GBP 8 billion
- Average transfer price: 100 percent, as it assumed all assets at book value from two nationalized failing institutions
- Wider mandate?: --
- Eligible loans: All assets from two nationalized failing institutions
- Transfer: Mandatory (Yes, in practice as it assumed all assets from the two failing institutions)
- Large loans transferred: n.a. Residential loans represented 95 percent of the transferred loans
- Participating financial institutions: Closed bank only; two nationalized banks (Bradford & Bingley and Northern Rock)
- Special powers: No
- Year of creation: October 2010
- Predefined lifespan: No
- Still in operation?: No, the selling process concluded in October 2021. It remains active without any staff and some remaining assets related to the funded pension schemes transferred from the two failed banks

### Western Hemisphere — Colombia: Central de Inversiones SA (CISA)
- Ownership: Initially owned by the deposit insurance agency (FOGAFIN). As of 2007, owned by the Ministry of Finance
- Capital issued: USD 0.3 billion
- Total funding and means of funding by the AMC: USD 3.2 billion from government securities, tax revenues, and other public resources (for example, deposit insurance fund)
- Outstanding debt: n.a.
- Size of distressed assets transferred: COP 5.6 trillion (2000–07) (2.7 percent of GDP)
- Recoveries and recovery rate: COP 3.2 trillion. Recovery rate: 57.1 percent
- Average transfer price: 100 percent
- Wider mandate?: --
- Eligible loans: Loans, trusts, and real estate
- Transfer: Mandatory
- Large loans transferred: n.a.
- Participating financial institutions: Nine state-owned banks and public institutions
- Special powers: No
- Year of creation: 2000
- Predefined lifespan: No
- Still in operation?: Still in operation, but initial NPL portfolio was wound down in 2007

### Western Hemisphere — Eastern Caribbean Currency Union: Eastern Caribbean Asset Management Corporation (ECAMC)
- Ownership: Fully owned by the participating governments of the Eastern Caribbean Currency Union
- Capital issued: USD 14.8 million government's equity
- Total funding and means of funding by the AMC: n.a.
- Outstanding debt: USD 3.37 million (22.8 percent of initial funding)
- Size of distressed assets transferred: USD 3.4 million (0.05 percent of regional GDP)
- Recoveries and recovery rate: n.a.
- Average transfer price: Circa 60 percent
- Wider mandate?: Also acting as receiver of financial institutions
- Eligible loans: Collateralized commercial loans or transferable securities, with outstanding principal of XCD 300,000 and above
- Transfer: No
- Large loans transferred: n.a.
- Participating financial institutions: 24 eligible financial institutions. As of March 2022, four entities transferred assets
- Special powers: No
- Year of creation: July 2017
- Predefined lifespan: Initial: five years. Revised: eight years
- Still in operation?: Yes

### Western Hemisphere — El Salvador: Fondo de Saneamiento y Fortalecimiento Financiero (FOSAFFI)
- Ownership: Fully owned by the central bank
- Capital issued: n.a.
- Total funding and means of funding by the AMC: USD 285.7 million with bonds issued by the central bank (USD 257.1 million) and, to a lesser extent, by the Ministry of Finance (USD 28.6 million)
- Outstanding debt: USD 109.0 million (38.2 percent of initial funding)
- Size of distressed assets transferred: USD 285.7 million (5.4 percent of GDP)
- Recoveries and recovery rate: n.a.
- Average transfer price: 100 percent
- Wider mandate?: The AMC also injected capital in credit institutions
- Eligible loans: All types of loans and some other assets
- Transfer: Mandatory
- Large loans transferred: n.a.
- Participating financial institutions: All banks and credit and savings associations that had been previously nationalized in 1980 and were insolvent by 1990
- Special powers: Yes
- Year of creation: December 1990
- Predefined lifespan: No
- Still in operation?: Yes

### Western Hemisphere — Jamaica: Financial Sector Adjustment Company (FINSAC)
- Ownership: Fully owned by the government
- Capital issued: USD 15 million
- Total funding and means of funding by the AMC: Total amount n.a. Government-guaranteed bonds, later converted into equity (USD 730 million)
- Outstanding debt: n.a.
- Size of distressed assets transferred: JMD 74 billion (29.9 percent of GDP)
- Recoveries and recovery rate: JMD 11 billion. Recovery rate: 14.9 percent
- Average transfer price: Case-by-case agreements, but often at banks’ book values (that is, 100 percent)
- Wider mandate?: It also acts as resolution authority
- Eligible loans: 74 percent commercial loans, with the rest split between credit cards and real state/movable property
- Transfer: No, case-by-case agreement. Banks’ shareholders had to commit to inject one dollar in fresh capital for every two dollars of NPLs bought
- Large loans transferred: n.a.
- Participating financial institutions: All domestic financial institutions on a voluntary basis
- Special powers: No
- Year of creation: January 1997
- Predefined lifespan: Five to seven years
- Still in operation?: No, but with some ongoing court cases

### Western Hemisphere — Mexico: Fondo Bancario de Protección al Ahorro (FOBAPROA) / Resolution Trust Corporation (RTC) (United States)
- Mexico (FOBAPROA)
  - Ownership: Owned by the central bank with significant involvement of the Ministry of Finance
  - Capital issued: n.a. It was designated beneficiary of trusts created by transferring banks
  - Total funding and means of funding by the AMC: MXN 119 billion. Government-guaranteed bonds (10 years maturity, nontradable) and banks’ contributions for operating costs
  - Outstanding debt: MXN 0.96 billion. Transferred in 1999 to a new deposit insurance agency and paid through bank contributions and budgetary resources
  - Size of distressed assets transferred: MXN 119 billion (4.9 percent of GDP)
  - Recoveries and recovery rate: n.a.
  - Average transfer price: 100 percent. Assets were transferred at book value (MXN 119 billion) with loss-sharing arrangements (for between 20–30 percent loss)
  - Wider mandate?: It also had other functions: recapitalization, depositor protection, and lender of last resort
  - Eligible loans: Case-by-case negotiation resulting in the transfer of consumer, mortgage, and corporate loans
  - Transfer: Case-by-case agreement
  - Large loans transferred: n.a.
  - Participating financial institutions: 11 banks. It incentivized private recapitalizations by purchasing two pesos in NPLs for each peso of new capital
  - Special powers: No
  - Year of creation: 1995
  - Predefined lifespan: No
  - Still in operation?: No. In early 1999 the remaining assets were transferred to a new deposit insurance agency

- United States (Resolution Trust Corporation, RTC)
  - Ownership: Temporary federal agency set up in 1989 and managed by the Federal Deposit Insurance Corporation
  - Capital issued: n.a.
  - Total funding and means of funding by the AMC: USD 91.3 billion: • USD 60 billion from budgetary resources • USD 30.1 billion from government bonds • USD 1.2 billion from banks
  - Outstanding debt: No, but it incurred significant losses from resolving the failing savings and loan associations (S&Ls)
  - Size of distressed assets transferred: USD 465 billion (8.2 percent of GDP)
  - Recoveries and recovery rate: USD 395 billion. Recovery rate: 85.0 percent
  - Average transfer price: 100 percent, as it took control of 747 failing S&Ls, thus assuming all their assets and liabilities at book value
  - Wider mandate?: RTC had broad resolution powers over the failing S&Ls
  - Eligible loans: Both performing loans and NPLs (consumer, mortgage, and real estate loans), as well as securities and other assets
  - Transfer: Yes (Mandatory)
  - Large loans transferred: n.a.
  - Participating financial institutions: Closed bank only. In total, it resolved 747 S&Ls
  - Special powers: No
  - Year of creation: 1989
  - Predefined lifespan: Seven years (met)
  - Still in operation?: No. RTC ceased to exist in 1995 and remaining assets (USD 7.7 billion) were passed on to the Federal Deposit Insurance Corporation

*Source: TNM/2024/04 — The Case for (and Against) Asset Management Companies in Banking Crises*

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_Source: https://www.imf.org/-/media/files/publications/tnm/2024/english/tnmea2024004.pdf_