Vietnam bank fix begins
(9 August 2013 – Vietnam) Vietnam Asset Management Co said it will acquire as much as 10 trillion dong (A$522 million) of spoiled debt over the next two months as it considers possible foreign funding.
Vietnam’s state asset management company will issue special bonds to about 10 banks in exchange for as much as 10 trillion dong of non-performing loans in the next two months, chief executive Nguyen Huu Thuy said in an interview in Hanoi on Wednesday.
The lenders will be able to use the bonds to secure funding from the central bank, he said.
“We can start buying the first batch of bad debt in the next two weeks,” Thuy said. “This will send a positive signal to the market and investors, so they can see how quickly we can move forward and how determined we are in resolving bad debt.”
Prime Minister Nguyen Tan Dung is seeking to overhaul almost $5 billion in bad debt at banks that hava crimped lending, and revive an economy that last year grew at the slowest pace since at least 2005.
Vietnam is emulating a model tested by neighbours from Malaysia to China in forming an entity to acquire loans from banks, as it seeks to rejuvenate investor confidence.
State-owned enterprises account for about 53 percent of the banking system’s bad debt, according to the finance ministry.
Vietnam Shipbuilding Industry Group, the state-run company known as Vinashin, almost collapsed in 2010 because it over-diversified and failed to manage its cash flow and debt, according to the transport ministry.
Vinashin was on the brink of bankruptcy with about $4 billion of debt, the government said that year.
Lenders with bad-debt ratios of 3 percent and above will be required to sell their non-performing loans to the asset management company, according to a May government statement.