HÀ NỘI – Banks are putting non-performing loans (NPLs) and collateral of default borrowers on auction in a move to speed up the resolution of bad debts.

Most NPLs are attached to assets borrowers bought or created thanks to these loans, including real estate, factories, enterprises, industrial clusters and projects.

Agribank Management Company (Agribank AMC) announced that it would hold 12 auctions this month to sell bad debts and collateral totalling a starting price of more than VNĐ470 billion (US$20 million).

The auctions include three land lots in HCM City’s District 9 with a starting price of VNĐ93.23 billion; properties belonging to Life Pro Vietnam Company at a starting price of VNĐ257.4 billion, and a plot on Hà Nội’s Nguyễn Thái Học Street at a starting price of VNĐ68.5 billion.

After repurchasing all NPLs sold to the Việt Nam Asset Management Company, VietinBank has recently also announced it will be selling collateral to recoup the debts.

VietinBank is planning to sell the debt belonging to Sông Đáy-Hồng Hà Oil and Gas Joint Stock Company, which has a factory, cars, machinery, a production line and goods in stock. The debt has been valued at VNĐ66.18 billion, including both principal and interest rates, as of August 16 this year.

The bank has also announced it will sell inventory worth nearly VNĐ111 billion of NEM Trading Joint Stock Company.

Sacombank also plans to hold an auction on September 27 to sell 11 properties related to non-performing loans and collateral of its borrowers at a starting price of more than VNĐ10 trillion.

All the properties are real estate projects in southern HCM City and Bà Rịa-Vũng Tàu Province. Among them, the Phong Phú Industrial Zone, which covers an area of 134 hectares in HCM City’s Bình Chánh District, has a starting price of over VNĐ7.6 trillion. To take part in Sacombank’s auction, investors must deposit in advance 5 per cent of the properties’ starting prices.   

Sacombank recovered more than VNĐ3.6 trillion worth of bad debt in the first half of the year, bringing its non-performing loan ratio to 3.3 per cent compared to 4.28 per cent at the end of last year. The bank expects to bring down the bad debt ratio to 3 per cent by the end of this year. 

Besides banks, the Việt Nam Asset Management Company (VAMC), which is under the State Bank of Việt Nam (SBV)’s management and is in charge of buying bad debts from commercial banks, has recently put bad debts up for auction.

The company will auction bad debts belonging to Đồng Thiên Phú Group Joint Stock Company that it bought from Agribank for VNĐ220.1 billion.

The VAMC also plans to auction collateral from Golden City Limited Company which it bought for VNĐ76.3 billion, giving it the rights to 7,851 sq.m of land in HCM City’s District 9.

According to Nguyễn Văn Du, the SBV’s deputy chief inspector, enhanced legal frameworks in the National Assembly’s Resolution 42/2017/QH issued last year had helped banks and the VAMC better manage bad debts by allowing them to rapidly repossess collateral if borrowers default.

According to the SBV’s report, at the end of June this year, banks had handled VNĐ138.29 trillion of bad debt following Resolution 42, contributing to reducing the bad debt ratio in the entire banking system from 2.46 per cent on December 31, 2016 to 2.09 per cent. — VNS