Agribank is the first lender in Vietnam selling its nonperforming loans
Hanoi-based Vietnam Bank for Agriculture & Rural Development (Agribank) on Tuesday signed a contract to sell part of its bad debts to Vietnam Asset Management Company (VAMC), making it the first bank in Vietnam to trade with the state-owned bad debt buyer.
With the contract, worth more than VND1.7 trillion (US$80.6 million), Agribank sold more than VND2.5 trillion ($118.5 million) of nonperforming loans that 11 local enterprises owe, news website VOV reported.
VAMC will pay Agribank with its "special bond." Agribank can then use the bond to borrow refinancing loans from the State Bank of Vietnam.
How much loans the bank will get depends on the a central bank decision, but it will not be higher than 70 percent of the bond's value.
After the contract with Agribank, VAMC will buy bad debts from the three other banks: Saigon Commercial Bank (SCB), Saigon Hanoi Bank (SHB) and the Petroleum Bank (PGbank), Nguyen Quoc Hung, Vice President of VAMC was quoted in a Tuesday report of news website VnExpress as saying.
"The values of the debts of these banks is at least VND1 trillion ($47.5 million) and we will make purchases within this week," Hung said.
Ho Chi Minh City-based Nam Viet Commercial Joint Stock Bank (Navibank) and Asia Commercial Bank (ACB) said last month they were planning to sell part of their bad debts to VAMC but no clear plans for the move have been announced.
VAMC officially went into operation in late July with a chartered capital of VND500 billion ($23.7 million).
The initial goal of this firm is to handle approximately VND40-70 trillion ($1.9-3.3 billion) of bad debts this year. However, due to the late issuance of a circular on debt trading, it is expected to handle only VND35-40 trillion ($1.6-1.9 billion) of the bad debts before the year's end.