|The Viet Nam Asset Management Company (VAMC) will be established later this month.— Illustrative image
HA NOI (VNS)— The Viet Nam Asset Management Company (VAMC) will be established later this month, said member of the National Financial and Monetary Policy Advisory Council Le Xuan Nghia.
According to Nghia, VAMC will be under the management of the central bank rather than the finance ministry as funds used to handle bad debts will not come from the Government budget.
In addition, he said, VAMC should be the sole company to focus on resolving bad loans.
Nghia said the company's establishment must also be based on the principle that commercial banks would have to sell bad debts or else they faced a thorough inspection by the central bank. However, there should be regulations on debt levels, from which banks must sell bad loans to VAMC.
Before the company is up and running, commercial banks will have to sell bad debts based on their current book value. Assets also have to remain under banks' management.
Banks will also receive special bonds issued by the central bank and can use such bonds as collaterals to borrow money on open market operations.
Commercial banks holding VAMC bonds must set aside provisions of 20 per cent per year.
When VAMC sells its assets, the company will keep 15 per cent of proceeds and transfer 85 per cent to commercial banks, which then have to give the bonds back to the central bank.
VAMC, a 100-per-cent State-owned organisation established by the Government to handle bad debts held by credit institutions in Viet Nam, has been approved in principle by the Politburo. — VNS