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Malaysia: Pengurusan Danaharta Nasional Berhad

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After the devaluation of the Thai baht in 1997, the Malaysian economy experienced turmoil and a financial crisis. As part of the government's response to the financial crisis, it established Danaharta, a national asset management company, alongside a recapitalization agency, Danamodal, and a debt restructuring body, the CDRC, to address instability in the financial system. The government established Danaharta with the purpose of removing nonperforming loans from the financial system and maximizing their recovery. The Danaharta Act granted the agency special legal authority to more efficiently resolve NPLs. Danaharta received funding from the government and issued zero-coupon, government guaranteed bonds in exchange for assets, which it purchased at market value. To incentivize financial institutions to sell NPLs, Danaharta implemented an incentive and penalty structure, including a profit-sharing arrangement. Danaharta also managed RM27.97 billion ($7.4 billion) in NPLs previously acquired by the government and central bank. Danaharta used a variety of methods to deal with acquired assets depending on whether the borrowers were viable or non-viable. Over its lifetime, Danaharta's portfolio totaled RM52.42 billion in face value of NPLs, and it recovered RM30.35 billion (58 percent), and recognized a net loss of RM1.14 billion on RM8.94 billion total invested. When Danaharta ceased operations in December 2005, the remaining residual assets were transferred to a subsidiary of the Ministry of Finance, Prokhas, for collection.

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  • Dreyer, Mallory, 2021. "Malaysia: Pengurusan Danaharta Nasional Berhad," Journal of Financial Crises, Yale Program on Financial Stability (YPFS), vol. 3(2), pages 450-484, April.
    • Handle: RePEc:ysm:ypfsfc:322222
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    More about this item

    Keywords

    Malaysia; asset management company; NPLs; asset-backed securitization; Asian financial crisis;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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