While most credit institutions have made possible attempts to reduce their bad debt ratio to a safe level at below three per cent, VPBank and Sacombank remain cautious to be fairly high at 4.07 per cent and 3.74 per cent respectively.
Sacombank's bad debt ratio was reduced to a little over three per cent, which is considered the safety limit, in less than two years.
Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) has sold collaterals for debt collection, but 90 per cent of this amount is deferred for seven years at an interest rate of 7.5 per cent per annum.
The amount of bad debt that the Vietnam Asset Management Company (VAMC) has to deal with this year accounts for nearly half of the total bad debts VAMC has bought from banks.
New details regarding the business performance and financial health of Hoan Cau Group reveal a large pool of bad debt of VND2.4 trillion (roughly US$105 million) that was just repossessed by VAMC (Vietnam Asset Management Company).
These debts have collateral such as real estate, value machines and equipments in Da Nang and Ho Chi Minh City.
The debt is secured with 50,000 square metres of land plots in District 7, Ho Chi Minh City.
The National Assembly’s Resolution No. 42/2017/QH14 dated June 21, 2017 on the pilot settlement of bad debts of credit institutions is expected to remove barriers for the mergers and acquisitions (M&A) in the banking sector.
Shares ended Monday on a positive note as banks reacted to information that the new bad debt settlement resolution will likely be approved by the National Assembly this week.
Shares advanced on Monday on strong support from the banking sector, following a new National Assembly resolution to resolve bad debt.
Total non-performing loans (NPLs) of the entire credit institutions (CI) system until March 31, 2017 were VNĐ160 trillion (US$7 billion).
After a period of actively selling non-performing loans to the Việt Nam Asset Management Company (VAMC), banks are buying back the debts from the VAMC to self-handle.
