VAMC to hold debt trading at market prices in 2015

Can you share with us some of the VAMC’s major achievements more than a year now after its launch?

Since we started operations the VAMC has bought nearly VND121 trillion ($5.76 billion) in principal debts for VND81.6 trillion ($3.88 billion) from 39 credit institutions and issued VND88 trillion ($4.2 billion) in bonds in return. These debts were from a total 5,394 customers.

The VAMC not only surpassed its debt purchase target, it also exceeded its target for selling debts. To date our company has recovered VND4.161 trillion ($198 million) in bad debts against a projected VND2.5 trillion ($119 million). This does not include our recent sale of more than VND300 billion ($142 million) of Agribank debts, for which we are now awaiting a cash transfer.

What were the VAMC’s greatest challenges last year and what measures will need to be taken this year to facilitate the settlement of bad debts?

The VAMC’s biggest concern remains collecting on debts and auctioning assets, which is the most crucial aspect of tackling bad debts.

Firstly, we need governmental bodies from all levels to join in our efforts. Secondly, we need to classify customer groups and types of debts. In cases where the debt can be recovered, the VAMC is willing to reschedule the debts at lower interest rates to help businesses or individuals resume their activities.

Selling distressed assets to recover on debts is the worst case scenario.

Thirdly, we are awaiting big opportunities. Given the real estate market’s pitiful condition at this time, selling distressed assets proves difficult. Things will be different when the market warms.

Also, selling below par value is causing us headaches as there is still no clear legal document outlining how to do this.

What are the VAMC’s operational goals for 2015?

In 2015 credit institutions will be obliged to adhere to more stringent regulations on debt classifications, as set forth by the State Bank. Therefore, I believe credit entities will be much more active in selling their debts to the VAMC.

With the National Assembly’s goal of bringing the bank’s sector’s total bad debts down to below 3 per cent in 2015, I expect the VAMC to purchase between VND70 and VND100 trillion ($3.30-$4.7 billion) in bad debts this year and sell debts in the amount from VND8-10 trillion ($380-$470 million).

Specifically, trading at market prices will surely take place in 2015, as the VAMC has already submitted a plan to the SBV for approval.

Given our current modest capital of only VND500 billion ($23.8 million), it is hard for us to buy debts at market prices. But we are still committed to deploying debt trading as per the market prices in the near future, especially once we are allowed to increase our chartered capital.