Vietnam asset management firm buys $186 mil worth bank bad debts

Thanh Nien News

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Cash being counted at a Ho Chi Minh City branch of major lender Vietcombank. Photo courtesy of Thoi bao Kinh te Saigon Online

The state-owned Vietnam Asset Management Company said it has bought 3.93 trillion (US$186.40 million) worth of debts from banks in the first quarter.
Nguyen Quoc Hung, its vice chairman, was quoted as saying by Thoi bao Kinh te Saigon Online newspaper that the VAMC bought 169 loans from nine banks, including a state-owned one, raising its total buying to VND42.83 trillion.
The company also issued VND3.05 trillion worth of bonds during the quarter and a total of VND35.45 trillion since it began operations last July.
Although the company fell short of its first quarter target of buying debts worth VND10 trillion, Hung said it is determined to meet the full-year goal of VND70 trillion.
It plans to buy debts worth VND20 trillion in the second quarter.
“Buying debts does not mean buying at any price, but identifying the bad debts that need buying and deal with them,” Hung said.
The company is working with banks and businesses to restructure the latter and advise the former on how to deal with the bad debts.
Hung said he is more optimistic this year about banks’ ability to deal with bad debts since some of them have been classified as "not too bad."
Bank loans are classified into five groups – current, special mention, substandard, doubtful, and bad.
But he warned that banks should not rely entirely on his company to clear their bad debts, saying it is just one of several tools.
“Lenders need to have a broad and far vision of their asset quality and set their own bad debt measures for the long term.
"If they fail to assess their bad debt situation correctly and be proactive in resolving it, they are going to fail.”
Last November bad debts were estimated at VND152.18 trillion ($7.22 billion), or 4.55 percent of outstanding loans.
That represented an increase of VND19.76 trillion from January last year when the ratio was 4.3 percent.

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