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More investors show interest in bad debts
Rising interest of investors recently in non-performing loans (NPLs) of credit institutions is expected to help expedite the handling of bad debt.
According to Thoi bao ngan hang (Banking Times) newspaper, after finishing an acquisition deal of a property project listed as a bad debt asset in HCM City in July more successfully than expected, a group of Taiwanese investors is keenly surveying some other bad debts mortgaged by real estate assets in the city for acquisition.
Representatives of Mekong Capital Fund is also negotiating with a Vietnamese bank to be able to fund and buy bad debts, or act as a bridge to help foreign investors take part in the bad debt handling in local banks.
Besides Mekong Capital, other funds such as Saigon Asset Management (SAM) and Viet Nam Asset Management (VAM) are also negotiating with local banks for some debt assets.
Industry insiders said that it was a good time for long-term investors with a strong financial status to take part in the bad debt trading market thanks to the recovery of the real estate market. Most of bad debts in Viet Nam are mortgaged by real estate assets.
However, they also suggested to the government that it streamline the existing legal framework that hinders measures aimed to recoup mortgaged assets.
Vice Chairman of the National Financial Supervisory Commission (NFSC) Truong Van Phuoc said that the shortcomings in the legal framework had hindered foreign institutions from stepping in to purchase NPLs in Viet Nam at market prices.
Chairman of the Viet Nam Asset Management Company (VAMC) Nguyen Quoc Hung also recommended that the government quickly ratify regulations on debt trading conditions in accordance with Viet Nam's conditions to allow for the creation of a debt trading market.
According to government statistics, more than VND400 trillion (US$17.857 billion) worth of NPLs were settled between 2012 and 2015, of which 28 per cent was covered with provisioning and 45 per cent was sold to VAMC, while 27 per cent was settled through other modes.
However, VAMC, while having taken over 45 per cent of the banking system's total NPL, has just recovered VND8 trillion ($357.4 million) due to the out-of-date legal framework. This means that it has bought large amounts of debt, but still cannot sell it.
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