From Non-Performing Loans to Capital Markets: The Role of Asset Management Companies

Asset management companies (AMCs) play a critical intermediary role in transferring non-performing loans in the banking system to capital markets. In theory, this mechanism is strong: it lightens the bank's balance sheet while directing NPL portfolios to investors who have the capacity to price and manage them.

In practice in Turkey, however, the system remains significantly below its potential. The legal framework limits the field of activity for AMCs, secondary market depth is insufficient, and portfolio pricing mechanisms are still in the developmental phase.

Resolving this issue requires not only expanding AMC regulations but also banks, investors, regulators, and restructuring professionals acting with a common ecosystem understanding. Transferring non-performing loans to capital markets, when the correct corporate framework is established, can turn into an important value creation mechanism for both creditor banks and the economy.