SHB recovers nearly VND3 trillion of bad debt

SHB and Habubank merger is the first merge under the country's re-structuring plan

Last year, the State Bank of Vietnam gave its approval for the merger between SHB and Habubank. According to SBV’s decision, as part of the merger process, SHB took over all legal assets, rights and duties of  Habubank.

During the first six months of 2013, SHB successfully dealt with nearly VND3 trillion of Habubank's bad debt via enterprise re-structuring, interest rate reduction and delaying debt deadlines for some customers. SHB also plans on selling some of their bad debt to Vietnam Asset Management Company (VAMC).

VAMC would buy bad debts from banks via their self-issued bonds. These bonds have no interest rate and credit institutions can use them to apply for refinance loans and only have a five-year limit to resolve the acquired bad debts. According to the plan, from September 21 to October 30, VAMC will issue VND10 trillion worth of bonds to buy bad debts from Navibanks, SCB, Agribank and SHB.

However, as of June 30, SHB's bad debts still accounted for 9.04% of its total outstanding loans-- 0.24% higher than last year. The rate increased because of Habubank's bad debts, but SHB assured everyone that these customers are all manufacturers and that they have proper collateral.

Furthermore, SHB will follow the instructions of the government and the State Bank of Vietnam to deal with the bad debts of Vietnam Shipbuilding Industry Group (Vinashin). It's hoped that by the end of the year, bad debt will account for less than 5% of the total outstanding loans.

As of July 31, SHB's revenues were seriously decreased after it contributed over VND2.1 trillion to the risk prevention fund. Even though their shares do not have high prices, they do have high liquidity. SHB said some well-known foreign financial institutions have asked to buy their bonds.