The Viet Nam Asset Management Company (VAMC) has bought up its first batch of bad debt. VAMC Vice President Nguyen Quoc Hung spoke to Viet Nam Economic Times newspaper about the company's role.
Why did VAMC select Agribank as its first client?
It has an extensive network nationwide, mainly in rural areas, and is willing to restructure its debts.
VAMC agreed to buy 27 bad loans from 11 companies worth more than VND 2.4 trillion ($112.8 million) for over VND 1.7 trillion ($80 million). The value of the asset guarantee written in the books from these banks is VND 3.6 trillion ($169.2 million).
Which banks will be next?
At present, about 10 banks have expressed interest in selling their bad debts to VAMC. All 10 have sent us the necessary documents. We are now in the process of screening them.
We found out that four of the 10 have bad debt ratios below 3 per cent (one of them is a state-run commercial bank). This is an indication that Government Decree 52 was successful, as credit institutions are aware that selling their bad debt can benefit both themselves and the national economy.
Three more contracts are expected to be signed soon with Sai Gon Commercial Bank (SCB), the Sai Gon Ha Noi Bank (SHB) and the Petroleum Bank (PGBank).
Based on the total debts that the banks want to sell, VAMC has set out a plan to raise money through issuing government bonds worth about VND30-35trillion ($1,645 million).
Of course, we have to write a proposal and submit it to the State Bank of Viet Nam (SBV) for approval. We hope that by late October, we will be able to buy about VND 10 trillion ($470 million) of bad debts.
When VAMC was created, there was concern that many credit institutions would not want to sell their bad loans to it. How do you respond to that?
Before we started to buy bad debts, the SBV organised two meetings with credit institutions to listen to their opinions: one in Ha Noi, one in HCM City.
Following the meetings, we scheduled meetings with institutions that have bad loan ratios over 3 per cent. Shortly after those meetings, many of them expressed interest in working with us.
These were positive signs. They understood the value of selling their bad debts to VAMC.
In return, after completing the transactions, VAMC will continue to review the loans and restructure them while supporting the credit institutions and the enterprises to restructure their production. When these activities are completed, our clients will be able to offer new loans.
Even more importantly, after selling their bad loans to us, these credit institutions become "clean", so they can use our bonds to ask the banks to lend them money.
The SBV Governor at first aimed for VAMC to buy about VND70 trillion ($3.29 billion). Why was the figure you mentioned only VND 30-35 trillion?
VAMC officially started operations on September 27. Three days later, we signed our first contract with Agribank. We hope that more are on the way.
I think if both sides (the banks and VAMC) want to speed up the process, they should both be pro-active. On the side of the banks, they must send us sufficient and reliable information to enable us to conduct our appraisal easily.
That's why in the remaining three months of 2013, we will be able to buy about VND 30 trillion ($1.41 billion) of bad debts. — VNS