Up to 35 international investors and 17 domestic companies have contacted with the central bank-run Vietnam Asset Management Company (VAMC
) to purchase non-performing loans (NPLs), VAMC Chairman Nguyen Quoc Hung said.
VAMC has signed confidentiality agreements with thirteen foreign companies including the International Finance Corporation (IFC
), Standard Chartered Bank, Jadara Capital, Seven Seas Holding, Blackriver Asset Management, GIC, Yamaichi Securities, and VinaCapital.
Taiwan’s CTBC Bank – HCM City branch has been the latest foreign institution permitted to buy bad debt
s in Vietnam.
Le Xuan Nghia, director of the Business Development Institute, confirmed to the Dau Tu (Investment) newspaper that a host of overseas players are lining up to buy bad debts. “What they wait for is simplified mechanisms and procedures, reasonable prices and higher ownership limits,” he noted.
Despite the appeal of bad debts, foreign investors are facing many legal hindrances to be able to purchase the debts. These obstacles include the right to asset, convertibility into ownership and foreign holding cap.
These shortcomings have caused NPLs to stay stuck at VAMC, disheartening banks to further unload trouble loans to VAMC, according to experts.
“If the legal framework remains cumbersome and deficient, both domestic and foreign players will stay on the sidelines,” economist Vo Tri Thanh warned.
Since its inception in October 2013, VAMC has purchased debts worth 262 trillion dong ($11.7 billion) in book value for 227.8 trillion dong ($10.2 billion) from 42 credit institutions, Hung said. Most of the debts are backed by real estate and land-attached assets.
However, the firm has recouped just 38 trillion dong ($1.7 billion), representing 14.5% of the debts purchased.
To remove obstacles for VAMC and speed up the bad debt handling, VAMC’s chairman suggested the parliament adopt a special law with a validity period of 3-5 years.