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Foreign investors still waiting for clear regulations on bad debts
Former CEO of Lehman Brothers Bank John Sheehand says foreign investors are eager to pour billions of US dollars into Viet Nam's debt market.
Speaking at a seminar in Ha Noi on Thursday, the Economist for Capital Service Group joined a range of experts to discuss the removal of non-performing loans from Viet Nam's banking sector.
Mr Sheehand said most US investors were interested in purchasing real-estate debts whilst Japanese and EU investors were eyeing smaller debts in the market.
He added that investors were struggling to find the best mechanism to funnel investment into the market.
Agreeing with Mr Sheehand, Truong Thanh Duc, Chairman of the Banking Legislation Club, added that Viet Nam lacked the huge capital reserves to alleviate bad debt and needed funds from foreign investors.
He also said the country's policies provided significant obstacles to foreign investment bad debts.
Speaking to Bloomberg, the General Director of the Viet Nam Assets Management Company (VAMC), Nguyen Huu Thuy, revealed that foreign investors had expressed interest in co-operating with the company to purchase Vietnamese debt.
VAMC has been operating for three weeks and we have received interest from TPG Growth of private-equity investment firm, Standard Chartered, Thuy said.
Whilst no deal has been signed, negotiations are expected to continue.
Many anticipate the deal will be subject to delays while authorities scramble to develop regulations guiding the purchase and sale of bad debts handled by VAMC and rules on assets, risk and special purpose bonds.
Currently, there are no concrete regulations governing the sale of debt between commercial banks and VAMC.
Meeting with VAMC this week, the East-Asian manager for the International Finance Corporation (IFC), Simon Andrews, pledged the IFC's support of VAMC in addressing non-performing loans in Viet Nam's banking sector.
In the next two months, VAMC will purchase VND10 trillion (US$476 million) worth of bad debts from ten commercial banks.
Experts predict up to VND30-40 trillion ($1.4 -1.9 billion) of bad debts will be removed from the sector this year by VAMC.
The figure is well below the benchmark set by the Governor of Viet Nam's State Bank, Nguyen Van Binh, who predicted the removal of VND40-70 trillion ($1.9-3.3 billion) of non-performing loans.
Analysts have emphad the importance of developing clear regulations to encourage credit institutions to sell non-performing loans and to entice foreign investors.
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