Vietnam VAMC Ready to Unload Bad Debts at Market Prices

Tuan Minh

09:57 20/04/2016

BizLIVE - Vietnam Asset Management Company is ready to sell some 7,000 bad debts at market prices.

Vietnam VAMC Ready to Unload Bad Debts at Market Prices

The Vietnamese central bank is striving to clean up bad debt. (Photo: Internet)

The central bank-run Vietnam Asset Management Company (VAMC) is looking for potential investors to unload around 7,000 bad debts at market prices, the Saigon Times newspaper reported, citing a relevant source.
VAMC has evaluated and classified the soured loans and mortgaged assets into groups. The bad debts are free of disputes, so they can be sold to investors, according to the source.    
VAMC, which was established in July 2013, had acquired over 24,500 debts worth nearly 245 trillion dong (roughly $11 billion) at book value as of the end of 2015.
The company has been mandated to buy another 40 trillion dong ($1.78 billion) worth of troubled loans this year, and will issue special bonds in exchange.
With VAMC’s operations, the bad debt ratio in the local banking system was brought down to 2.55% at the end of last year from 3.25% a year earlier, and 17% as of September 2012.  
Handling bad debts is among the major challenges for the newly-elected State Bank of Vietnam (SBV) Governor Le Minh Hung.
He has enacted a decision, effective on April 12, allowing VAMC to purchase non-performing loans (NPLs) at market prices. Details of the decision have not been unveiled.  
The newspaper cited banking insiders as saying that the decision is unlikely to help VAMC buy and sell NPLs at market prices immediately as this depends on the firm, banks, law enforcement agencies and the real estate market.
The governor last week requested local and foreign banks to enhance their credit quality and keep their bad debt ratios below 3%. Banks were also asked to submit their plans to handle NPLs for 2016 before April 28.