The Vietnam Asset Management Company (VAMC) sees non-performing loans (NPLs) purchase off to a good start as it has set to handle 40-70 trillion VND (18.8-32.9 billion USD) of NPLs in 2013. The Saigon Times Daily reports.

The Vietnam Asset Management Company (VAMC) has seen encouraging signs of its endeavor to purchase bad debts from credit institutions, with a contract signed on October 1 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 The Saigon Times 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 the 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 2.4 trillion VND.

“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 VND, another to be signed with SHB, and one with PGBank, the last one having book value of some 200 billion VND but to be purchased at 170 billion VND.

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 3 trillion VND of bad debts, and picked out only 1.7 trillion VND 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.

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 30 trillion VND 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.

He likened bad debts to patients that need to be hospitalised, 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.

Bad debts at Agribank are the first purchased by VAMC, and the company will issue special bonds with the total value of over 1.7 trillion VND for this contract. Mortgaged assets in the contract have the total value of over 3.6 trillion VND.

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 35 trillion VND worth of special bonds to buy bad debts from now to the end of this year.-VNA