VAMC needs more financial strength to better handle bad debts

VAMC needs more financial strength to better handle bad debts

Bringing NPL resolution into development policy framework marks a shift from a reactive, situational approach to one that is proactive, long term and structural.

By the end of December 2025, VAMC purchased a total NPLs worth more than VNĐ400 trillion from credit institutions, more than 80 per cent of which were settled by VAMC and credit institutions. — Photo cafef.vn

With the Vietnam Asset Management Company assigned a pivotal role in tackling bad debts, experts say the Government must strengthen the firm’s finances and sharpen its operational efficiency if it is to deliver lasting results.

Under Politburo Resolution No 79-NQ/TW on developing the State-owned economy, issued this month, VAMC, a State-owned entity tasked with cleaning up bad debts at credit institutions, is expected to play a core role in handling non-performing loans, restructuring assets and helping safeguard macroeconomic stability and financial security.

For the first time, the resolution places the settlement of non-performing loans and financial restructuring at the heart of the State’s economic development strategy. It clearly affirms that improving balance sheets is not merely a technical task for the banking sector, but a prerequisite for lifting growth quality, strengthening financial system safety and enhancing the economy’s long-term resilience.

Bringing NPL resolution into the development policy framework also marks a shift from a reactive, situational approach to one that is proactive, long term and structural.

Experience shows that settling NPLs at market value with investor participation is an inevitable trend, helping improve capital allocation efficiency, ease the burden of outstanding debts and promote corporate restructuring. To carry out these tasks effectively, however, VAMC needs stronger financial resources and legal authority in line with its expanding responsibilities.

In the new context set by Resolution 79, which calls for greater capacity and efficiency at VAMC, the company’s position in national debt settlement must be reinforced. The focus of the next phase is no longer on handling individual debts at each credit institution, but on restructuring the financial balance sheets of the entire banking system through market mechanisms to ensure transparency and sustainability. Increasing VAMC’s charter capital is therefore a key requirement.

VAMC’s charter capital currently stands at just VNĐ5 trillion (US$190 million) despite plans to raise it to VNĐ10 trillion under the Prime Minister’s Decision No.689/QĐ-TTg on restructuring credit institutions alongside bad debt handling in the 2021–2025 period. This level is modest compared with the volume of NPLs that need to be settled and falls short of what is required to purchase debts at market value on a large scale.

Beyond boosting its financial capacity, experts say VAMC also needs additional, clearly defined powers to act more swiftly, proactively and effectively in resolving bad debts.

While the Law on Credit Institutions includes a chapter on NPL handling, VAMC’s legal status and authority remain largely similar to those of other credit institutions, even though its mandate is far more systemic and macro in nature. Its powers therefore need to be expanded to allow greater initiative in buying, selling and handling collateral assets, stronger inter-agency coordination and a more flexible legal framework so it can serve as a central coordinator in the debt trading market.

According to VAMC data, by the end of December 2025 the company had purchased more than VNĐ400 trillion worth of NPLs from credit institutions, with over 80 per cent settled jointly by VAMC and the banks involved. 

Bizhub