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SBV seeks company to buy and sell bad debt
The State Bank of Viet Nam (SBV) aims to resolve bad debts and improve the capital flow of the economy by submitting a plan for the establishment of a debt purchase-and-sale company to the Government.
Le Xuan Nghia, a member of the Advisory Council of National Monetary Policies told the news site VnEconomy that the restructuring process of the banking sector will be achieved in three parts: strengthening liquidity, resolving bad debts and restructuring operation.
Nghia said the first part has already achieved remarkable results and the banking sector's liquidity is now stable. Some small banks have been prevented from loosing their payment capacity.
In addition, activities on the inter-banking market have become more transparent creating a stable interest rate of 10-12 per cent.
Several medium-and-large scale banks have money in reserve and capital mobilisation amongst people has increased loans in both Vietnamese dong and foreign currencies.
This could be a pre-condition for following stages of sector reform, he added.
Nghia also said that the SBV has promulgated regulations to provide favourable conditions for commercial banks to restructure debts such as extending repayment terms, reducing interest rates and creating legal frameworks to resolve debts.
The central bank also requested that the Government reduce and make some taxes and fees exempt for banks which were merged and acquired.
He said the scale of bad debts was relatively high and exceeded the financial capacity of commercial banks and businesses.
He said SBV has prepared restructuring programmes for the third period by issuing some regulations on classifying assets, using risk prevention funds and creating a criteria for accounting standards and financial reports. Next year would be the peak time of the restructuring programme, which is expected to be finished by 2015, he added.
He said the Government should allow the central bank and commercial banks to use risk prevention funds to resolve bad debts and loans.
Since 2007, Viet Nam has had a Debt and Asset Trading Corporation (DATC), which operates under the Finance Ministry to settle bad debts.
However, DATC has not had enough financial resources to restructure debt-ridden businesses.
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