Illustrative image (Source: http://english.vietnamnet.vn) HanNgoc Vu, CEO of the Vietnam International Bank (VIB), recently said that in2016 his bank repurchased 1.33 trillion VND (58.3 million USD) ofnon-performing loans (NPLs) that it sold to VAMC. It will continue to buy backroughly 1 trillion VND this year.
VIBis due to acquire all bad debts that it sold to VAMC by mid-2018, Vu said.
VIB’sNPL ratio increased to 2.58 percent in 2016 from 2.05 percent in 2015.
Accordingto Vu, the increase in the 2016 NPL ratio was due to the bank activelyacquiring some debts sold to VAMC to promote the debt settlement process onfinding that the process had been better than the previous period.
Evenwhen repurchasing the bad debt from VAMC, the entire bad debt of VIB is stillless than 3 percent regulated by the central bank, Vu said.
Previously,Vietcombank’s Chairman Nghiem Xuan Thanh had also said that his bank finishedthe repurchase of all 4.3 trillion VND of NPLs that it sold to VAMC, threeyears earlier than planned.
VietinbankChairman Nguyen Van Thang said that in 2017 his bank would focus on settlingbad debts and would buy all bad debts that it sold to VAMC, completely settlingthe bad debts in 2017 instead of 2018 as planned earlier.
Expertssaid that the repurchase of bad debts from VAMC was positive, proving thatbusiness performance of commercial banks is more positive.
However,according to Vu, not all banks can buy back bad debts from VAMC. He explainedthough some may really want to buy back the bad debts, these banks must havesufficient financial resources and the NPL ratio must be low enough to ensurethat after the debt repurchase, the NPL ratio is still less than 3 percent asregulated by the central bank.
“Thereare going to have banks that face limitations as the NPL ratio at the banks hasalready been too high or the banks do not have enough profits to put provision,therefore, they still have to continue leaving bad debts at VAMC,” Vu told Dautu chung khoan (Securities Investment) newspaper.
Infact, banks have identified VAMC as a bad debt “landing” as the recovery of thedebts at VAMC is slow. The banks therefore must take the initiative in handlingthe debts by themselves.
Accordingto VAMC, it has bought bad debts of 262 trillion VND from 42 creditinstitutions. However, it has recovered only 42.85 trillion VND of book baddebts.
EconomistVu Dinh Anh said that apart from the barrier regarding financial resources topurchase and dispose bad debts, legal regulations, especially procedures onsettlement of collaterals, are not suitable in reality as they create anawkward situation for VAMC, and are unable to accelerate the bad debtsettlement process.
VIB’sVu said the annual bad debt settlement is very good, especially the sale of baddebt. However, currently, there are still certain obstacles in selling baddebts to foreign buyers. When foreigners decide to purchase bad debt, thatmeans they have professional perspective, they will consider bad debt qualitywith regard to collaterals and transparency, and see how much can be recoveredbefore deciding to purchase.
Manyforeigners have been interested in VIB’s bad debts for a long time, Vu said.However, commercial conditions have been negotiated and legal obstacles remain.Therefore, if it can be solved, VIB’s bad debt settlement speed will be muchfaster than today, he said.-VNA
VNA
