VAMC to continue settling bad debts through special bonds
VAMC to continue settling bad debts through special bonds
State-run Vietnam Asset Management Company (VAMC) aims to continue purchasing nonperforming loans (NPLs) by using special bonds, targeting weak credit institutions to ward off risks to the local banking system.
In its business and investment plan for the 2019-2023 period, the company revealed it is trying to speed up the purchase and sale of bad debts, reported Thanh Nien newspaper.
Credit institutions whose NPLs account for over 3% will receive special bonds with values governed by the State Bank of Vietnam.
VAMC intends to settle its existing NPLs by late 2020; bad debts purchased according to market prices and those involving special bonds will be settled from 2021 to 2023.
Under its plan, the company aims to buy NPLs at market prices totaling VND4.5 trillion (US$193 million), and will settle NPLs worth VND50 trillion (US$2.1 billion) this year.
Similarly, the company will issue VND60 trillion worth of special bonds, purchase NPLs worth VND8.4 trillion in line with market prices and recover VND21.72 trillion worth of bad debts next year.
VAMC said it will prioritize the purchase of high-value NPLs. The move is intended to lower its management, oversight and inspection costs for borrowers, as well as reduce collateral for the company.
To achieve these targets, the company will seek the prime minister’s permission to raise its charter capital from the current VND2 trillion (roughly US$86 million) to VND5 trillion (US$215 million) in 2019, and to VND10 trillion in 2020.
It also wants to mobilize capital from individuals and organizations at home and abroad, and cooperate with local and international investors to restructure, purchase and sell enterprises during the NPL settlement process.
