Illustrative image (Photo: SEAbank) Hanoi (VNS/VNA) -Twelve out of 40 commercial banks have so far cleared all their non-performingloans (NPLs) kept at the Vietnam Asset Management Company (VAMC).
The banks include Vietcombank, Techcombank, MB, VIB, OCB, Nam A Bank, TPBankAgribank, VPBank, ACB, SeABank and Kien Long Bank.
Previously in 2013, VAMC accepted to buy bad debts of banks in a move to reducethe bad debt ratio of the entire banking system. Many banks had to sell baddebts to VAMC so they could take the debts off their balance sheet to have abad debt ratio of below 3 percent as required by the central bank and couldcontinue their operations as normal banks.
By selling the debts to VAMC, instead of money, banks received five-yearspecial bonds from VAMC. During the five years, banks had to make provisions of20 percent for special bonds each year. In principle, this affects banks’ annualprofits.
According to experts, when the on-balance sheet bad debt ratio at banks is lowand banks have gained fairly high profits in recent years, the trend of buyingback bad debts to clear debts at VAMC is becoming more common.
Banks also have to speed up the resolution of bad debts to meet the State Bankof Vietnam’s regulation. According to the central bank’s regulation, VAMC wasto keep the bad debts for only five years, and the deadline for the debts toreturn to the banks is 2020.
If a lender misses the deadline it faces penalties, including suspension of theright to pay shareholders dividends in cash. The dividends will instead be usedfor settling the bad debts.
According to Doan Van Thang, VAMC this year expected to basically complete the handlingof purchased bad debts from credit institutions, excluding those from weakones, as stated in Decision 1058 on restructuring credit institutionsassociated with dealing with bad debts in the 2016 to 2020 period.
VAMC would increase the purchase of debts at market prices according to plansapproved by SBV.
It reported that it purchased bad debts with special bonds of 381 debts worth 20.54trillion VND last year.
Another 37 bad debts were also purchased according to the market price at 2.25trillion VND.
Accumulated from its establishment until December 31, 2019, VAMC cooperatedwith credit institutions to recover 151.86 trillion VND of bad debt.
VAMC increased its charter capital to 5 trillion VND last year by the SBV andthe Government./.
The banks include Vietcombank, Techcombank, MB, VIB, OCB, Nam A Bank, TPBankAgribank, VPBank, ACB, SeABank and Kien Long Bank.
Previously in 2013, VAMC accepted to buy bad debts of banks in a move to reducethe bad debt ratio of the entire banking system. Many banks had to sell baddebts to VAMC so they could take the debts off their balance sheet to have abad debt ratio of below 3 percent as required by the central bank and couldcontinue their operations as normal banks.
By selling the debts to VAMC, instead of money, banks received five-yearspecial bonds from VAMC. During the five years, banks had to make provisions of20 percent for special bonds each year. In principle, this affects banks’ annualprofits.
According to experts, when the on-balance sheet bad debt ratio at banks is lowand banks have gained fairly high profits in recent years, the trend of buyingback bad debts to clear debts at VAMC is becoming more common.
Banks also have to speed up the resolution of bad debts to meet the State Bankof Vietnam’s regulation. According to the central bank’s regulation, VAMC wasto keep the bad debts for only five years, and the deadline for the debts toreturn to the banks is 2020.
If a lender misses the deadline it faces penalties, including suspension of theright to pay shareholders dividends in cash. The dividends will instead be usedfor settling the bad debts.
According to Doan Van Thang, VAMC this year expected to basically complete the handlingof purchased bad debts from credit institutions, excluding those from weakones, as stated in Decision 1058 on restructuring credit institutionsassociated with dealing with bad debts in the 2016 to 2020 period.
VAMC would increase the purchase of debts at market prices according to plansapproved by SBV.
It reported that it purchased bad debts with special bonds of 381 debts worth 20.54trillion VND last year.
Another 37 bad debts were also purchased according to the market price at 2.25trillion VND.
Accumulated from its establishment until December 31, 2019, VAMC cooperatedwith credit institutions to recover 151.86 trillion VND of bad debt.
VAMC increased its charter capital to 5 trillion VND last year by the SBV andthe Government./.
VNA
