State asset management firm plans to set up bad debt exchange
State asset management firm plans to set up bad debt exchange
The Vietnam Asset Management Company has announced plans to set up a bad debt trading floor in the next two years.
Its business plan for 2019-23 announced earlier this week envisages setting up and operating an exchange for buying and selling non-performing loans to boost liquidity in the bad debts market.
The VAMC is a state-owned buyer of bad debts, which takes them off bank’s books in exchange for special government bonds or cash. The banks are obliged to buy back any bad debt VAMC fails to collect after a period five years.
The VAMC will focus on completing documentation for the exchange, studying suitable models and creating a legal framework. It expects to finalize a proposal on the exchange this year.
At the end of 2018 the company had VND339 trillion ($14.5 billion) worth of bad debts it had bought since 2013, mostly by issuing five-year bonds.
This year it seeks to recover VND50 trillion ($2.14 billion), buy up another VND4.5 trillion ($192.61 million) worth of bad debts with cash and issue VND20 trillion ($856 million) worth of special bonds.
In 2020 the company hopes to recover VND60 trillion ($2.58 billion) bought with special bonds and buy VND8.4 trillion ($360.55 million) worth of debts from banks with cash.
The VAMC said it would ask the government to augment its capital and expects to get VND5 trillion ($214.64 million) this year and VND10 trillion ($429,28 milllion) in 2020-21.
