Vietnam Asset Management Company (VAMC) purchased VND208 trillion of bad debts and issued VND177 trillion of special bonds, from its establishment until the end of August 2015.
Mr Nguyen Quoc Hung, Chairman of the Board of Members of VAMC, said that VAMC bought VND77,355 billion of bad debts and issued VND68 trillion of special bonds from the start of 2015 to the end of August.
In a question and answer report sent to the members of the National Assembly at the 9th meeting session of the 13th National Assembly, Governor of the State Bank of Vietnam (SBV) Nguyen Van Binh said VND311.1 trillion of bad debts was estimated to have been settled in three years (2012-2014), equal to 67 percent of total bad debts counted to the end of September 2012 by the SBV.
The banking system had a total of VND465,328 billion of bad debts by the end of September 2012.
VAMC, established in July 2013, purchased VND40 trillion of bad debts in the year, bringing the non-performing loan (NPL) ratio of the banking system to about 3.61 percent of total outstanding loans by the end of 2013 and to 3.25 percent by the end of December 2014 (according to a report sent to the 9th meeting of the 13th National Assembly).
With VAMC, bad debts of the banking system have dropped dramatically. This sector still had VND160 trillion of bad debts as of the end of June 2015, or 3.72 percent of total outstanding loans, a decrease of VND305,328 billion from the end of September 2012 when the SBV conducted a comprehensive survey on NPL to work out a settlement scheme to submit to the Government.
To bring the bad debt ratio to below 3 percent, the SBV recently issued Document 5057/NHNN-TTGSNH, requesting credit institutions and foreign bank branches to classify debts in accordance with Circular 02/2013/TT-NHNN, to carry out drastic measures to handle bad debts, send the bad debt ratio to below 3 percent and complete bad debt settlement plans to be approved by the SBV before September 30, 2015.
The SBV also imposed sanctions on Vietnamese credit institutions failing to complete bad debt settlement plans in 2015 and reduce the bad debt ratio to below 3 percent before October 1, 2015. These credit institutions will not be considered and approved for network expansion at least until December 31, 2015.
Hung said the SBV refinanced some credit institutions by VAMC special bonds, but the volume was not much.
According to some bankers, banks still have not used special bonds to refinance at the SBV as deposits are on the increase. In addition, the discount rate is only 50 percent on the par value of the special bonds and the SBV only considers the discount rate for banks with real needs. For example, the SBV gives priority to refinancing special bonds to zero-dong banks to enable them carry out restructuring.
D.A
Vietnamese
