VAMC debt buyouts gain momentum

October 17, 2013 | 09:40

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After buying $81 million of non-performing loans (NPL) from state-owned Agribank, reducing the it’s bad debts to 7.5 per cent two weeks ago the Vietnam Asset Management Company (VAMC) made similar purchases from Saigon-Hanoi Commercial Joint Stock Bank (SHB), Petrolimex Commercial Joint Stock Bank (PG Bank), and Saigon Commercial Joint Stock Bank (SCB).

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The VAMC bought $55 million in bad debts for a price of $40.2 million. SCB alone sold debts valued at $47.6 million.

“On top of this we plan to sell more debts to the state asset company, hopefully sometime next month. We are aiming to reduce our NPL to below 3 per cent in preparation for a merger with a foreign partner,” said deputy director Vo Tan Hoang Van.

In late 2011, Ficombank and TinNghiaBank were merged with SCG and experts say it has reinforced its structure by offloading these bad debts.

Many smaller banks are selling, or trying to sell, NPLs to the asset corporation as part of their greater debt restructuring efforts.

Also last week, Ho Chi Minh City’s Southern Bank held a meeting with the VAMC.

The sliding economy has hurt banks. In 2011-2012 Southern Bank’s profits slid by nearly half while at the same time more borrowers defaulted on loans.

The bank’s financial statement released in June showed it was $57 million deep in NPLs, totalling 2.7 per cent of its total outstanding loans. This poses a challenge as the VAMC announced it would buy debts mostly from banks with NPL rates higher than 3 per cent.

According to VAMC deputy chairman Nguyen Quoc Hung, the corporation has received numerous proposals from banks aiming to sell, including others whose rates were below 3 per cent.

So far the VAMC has issued special bonds totalling $121 million to buy debts off Agribank, SHB, PG Bank, and SCB.

By By Thuy Vinh

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