The VAMC will build a legal framework for the establishment and operation of a bad debt trading platform in 2020-2021. (Photo: VNA))Hanoi (VNS/VNA) - The Vietnam Asset Management Company (VAMC) is planning to developa new strategy for buying and selling bad debts in Vietnam this year, inwhich it will play a central role to promote the development of the debttrading market.
The companyexpected to submit the plan to authorities for approval and bring themarket into operation next year, it said in the newly released five-yeardevelopment plan.
At the same time, theVAMC would build a legal framework for the establishment and operation ofa bad debt trading platform in 2020-2021, it said.
The VietnameseGovernment has taken many measures to clean up toxic assets in the bankingsystem. Under the central bank’s plan, asset management companies will take thehelm to tackle piles of non-performing loans (NPLs) at banks.
The VAMC, set up inJuly 2013, is in charge of cleaning up bad debts in the banking system. Sinceits establishment until the end of last year, the company had bought NPLsworth nearly 339 trillion VND (14.55 billion USD) at book value from creditinstitutions through the issuance of special bonds.
In 2018 alone, thefigure reached almost 31 trillion VND. The company also recouped 34 trillion VNDworth of bad debts last year, lifting the total value recovered during 2013-2018to 115.6 trillion VND, it reported.
For debt purchases atmarket prices, the value was more modest at 2.8 trillion VND last year andnearly 6 trillion VND in the last five years.
The VAMC said thisyear it had started to focus on buying bad debts from weak credit institutionswhich may cause risks to the banking system and those with bad debtratios of more than 3 percent.
It expects tobuy 50 trillion VND worth of bad debts and another 4.5 trillion VND of NPLsaccording to market prices in 2019.
In the five-yearplan, the company expects to buy bad debts worth at least 330 trillion VND(14.2 billion USD) by 2020. The figure of bad debts purchased at market priceswill reach at least 20 trillion VND.
The company will alsofocus on buying bad debts at the market price mechanism during the 2021-2023period.
Regarding debtsettlement, it hopes to basically complete the handling of bad debtspurchased in the previous period (excluding bad debts purchased throughissuance of special bonds to weak credit institutions) by the end of 2020.
The VAMC said itwould prioritise large bad debts to minimise management and collateral costsand shift focus from issuing special bonds to buying bad debts at marketprices. At the same time, it would select each debt or buy in batches tospeed up the process of bad debt restructuring through the company.
To implement thestrategy, the VAMC is asking for the Government to pump more money toraise charter capital from the current 2 trillion VND to 5 trillion VND in2019 and 10 trillion VND in 2020-2021.
It also hopes tomobilise capital from domestic and international organisations and individuals inaccordance with the law.-VNS/VNA
VNA
