VAMC sees bad debt purchase off to a good start

Thien Thanh Sanitaryware joint company

VAMC sees bad debt purchase off to a good start

Executives of VAMC and Agribank show joy after signing a frame agreement on VAMC’s buying bad debts from the lender - Photo: Courtesy of Agribank

HCMC – Vietnam Asset Management Company (VAMC) has seen encouraging signs of its endeavor to purchase bad debts from credit institutions, with a contract signed on Tuesday to buy trillions of debts and many more in the days to come, a senior executive said.

Le Quoc Hung, vice chairman of VAMC, told the Daily in an interview that “several contracts to buy bad debts from joint-stock banks will be signed right this week.” He was speaking after signing a frame contract with Vietnam Bank for Agriculture and Rural Development (Agribank) to buy the first batch of bad debts from the latter with the book value of over VND2.4 trillion.

“After this deal with Agribank, both sides will sign 27 sub-contracts for every specific bad debt. And this is just the first sign, since many more deals with other banks are being processed,” Hung told the Daily.

He cited for example a frame contract to be inked with SCB covering bad debts with book value amounting to hundreds of billions of Vietnam dong, another to be signed with SHB, and one with PGBank, the last one having book value of some VND200 billion but to be purchased at VND170 billion.

Hung said VAMC had to screen through all the debts on offer to single out what debts to be purchased.

For example, for the frame contract signed with Agribank, VAMC looked through the total amount of VND3 trillion of bad debts, and picked out only VND1.7 trillion for the agreement.

Asked to comment on the quality of bad debts, Hung said some are really bad, but there are also many that should not be hastily sold. “I have looked at some debts and mortgaged assets that are really valuable once the market recovers, so it will be regrettable if such assets are offloaded in a rush,” he said.

He also noted that banks are changing for the better their attitude toward VAMC, as more lenders are approaching the company with numerous offers.

“Initially, we had to contact credit institutions, but now they are coming to us. They are more open and cooperative, which can be seen as initial but encouraging results,” he said.

Currently, VAMC has received hundreds of dossiers from banks wanting to sell between 500 and 700 bad debts. “I feel assured of the target to buy back bad debts with book value of VND30 trillion within this year.”

Commenting on the capacity to liquidate bad debts, Hung said many international organizations have approached VAMC in recent times to buy debts. However, the company will not offload all such bad debts, but will retain a certain number, then restructure and improve them to render more support to enterprises as debtors.

Hung likened bad debts to patients that need to be hospitalized, and what is important is to have good doctors and good treatments.

“If bad debts remain at VAMC like patients in hospital, that is no recovery at all. What should be done is to improve the debts so that they can be discharged from hospital,” he said.

As covered in the Daily on Tuesday, bad debts at Agribank are the first purchased by VAMC.

VAMC will issue special bonds with the total value of over VND1.7 trillion for this contract. Mortgaged assets in the contract have the total value of over VND3.6 trillion.

These debts have met conditions required by the Circular No. 19/2013 on bad debt trading and handling, the source said.

VAMC targets to issue VND35 trillion worth of special bonds to buy bad debts from now to the end of this year.

By Hong Phuc - The Saigon Times Daily