NPL bargain hunt starts

Private equity investors are eyeing non-peforming loan dealsPhoto: Le Toan

Le Xuan Nghia, former deputy chairman of the National Financial Supervisory Commission, said that since the Vietnam Assets Management Company (VAMC) was established over a month ago, “many foreign investors are coming to Vietnam to buy loan packages including giants such as US Blackstone Group.”

Blackstone is a multinational private equity, investment banking, alternative asset management, and financial services corporation.

“This has exceeded our expectations, as before the establishment of the VAMC we were concerned that no one would be interested in buying up NPLs from banks and even once it was established we were worried it would find it difficult to resell them,” added Nghia at last week’s international conference on Vietnam’s macroeconomy and bank restructuring.

It is reported that more than 20 foreign business delegations have visited Vietnam to explore the possibility of buying high volume bad debts and with many local banks eager to sell their NPLs to the VAMC, there should be more than enough to go around.

Simon Andrew, regional manager of International Finance Corporation for Cambodia, Laos, Thailand and Vietnam, said that foreign investors were very interested in Vietnam’s NPLs.

However, foreign investors would have to first overcome certain legal obstructions, particularly those that were unclear about their asset ownership rights, he added.

Nghia reasserted the VAMC planned to buy up around $1.4- $1.6 billion in NPLs within this year.

Can Van Luc, senior advisor to the chairman of the Bank for Investment and Development of Vietnam, said many countries had sold NPLs to foreign partners. He noted in some regional countries, 60-70 per cent of NPLs have been sold to foreign institutions.

According to economic experts, Vietnam is focusing on economic reform and foreign financial institutions are looking at this as an opportunity, particularly in buying high volume NPLs.

However, Nghia did admit that while this interest might help, an overall solution was still needed and might take time.

“If the economy continues to slow down and the property market continues to suffer, NPLs will be much higher risk and foreign investors will opt out. This is not only a banking sector problem, but one of the whole economy,” he stressed.