Commercial banks queue up to sell bad debts
Commercial banks queue up to sell bad debts
The offers to sell bad debts are coming in thick and fast after the Vietnam Asset Management Company (VAMC) started up and made the first deal with Agribank.
After buying VND1.7 trillion worth of bad debts from Agribank, VAMC would sign other debt purchase contracts with SCB, SHB and PG Bank this week. It plans to buy VND10 trillion worth of bad debts in October, while the figure would be VND35 trillion by the end of the year.
The issuance of special bonds would be carried out right after VAMC and the banks sign contracts. However, it is still unclear about the refinancing interest rate. The involved parties still await the final decision from the Prime Minister, but the minimum interest rate is 2 percent.
An official of the State Bank said that the reasonable bond interest rate is some 2 percent below the currently applied refinancing interest rate, which is now 7 percent per annum.
In the case of Agribank, which borne the bad debt worth VND2.5 trillion, the bank has got VND1.7 trillion worth of bonds after the debt sale which it can mortgage at the State Bank for loans.
VAMC, which began its operation just one month ago, has got many jobs to do. It is the only debt buyer who is willing to make deals at the moment, while there are too many sellers.
Nguyen Quoc Hung, Deputy Chair of VAMC, said there have been so many offers to sell debts that VAMC’s officers have to work on weekend as well. They still have not finished the classification of bad debts to decide whether to buy them.
Prior to that, two conferences discussing the implementation of the plan on purchasing bad debts were held in Hanoi and HCM City. According to Hung, five credit institutions in HCM City came shortly after the conference to register the debt sale. In Hanoi, some banks have come to VAMC’s headquarter to make offers.
Ten banks had offered to sell debts to VAMC by October 1, 2013. Four of them have the non-performing loan (NPL) ratio at below 3 percent, and one is state owned bank. Meanwhile, the banks with the NPL ratio of less than 3 percent don’t have to sell debts to VAMC.
However, in the immediate time, VAMC would prioritize to buy bad debts from three subjects: 1) state owned banks, 2) the banks subject to compulsory restructuring and 3) the banks with the bad debt ratio at over 3 percent.
Navibank has sent words intimating that it wants to sell VND200 billion worth of bad debts to VAMC, but it has not made further steps.
Hung noted that banks have changed their thoughts about VAMC. Instead of keeping doubts about the necessity of VAMC, a lot of banks now keep an active outlook about the institution.
Dr. Le Xuan Nghia, Head of the Institute for Business Development, said on Nguoi lao dong that banks would run a race to sell debts to VAMC in the time to come, because they have to finish the debt classification and provisioning against risks prior to June 30, 2014 as stipulated in the Circular No. 02.
In the press release on October 2, VAMC said buying debts is just the first step in the long term cooperation between the institution and credit institutions. The aim that they strive to in the next stages is to restructure the debts to make the banks’ financial situation healthier. They would also help businesses to access bank loans in order to foster the production and business.
vietnamnet
