VAMC makes first seizure of mortgaged asset

The government leader made the request at a conference held by the State Bank of Viet Nam (SBV) in Ha Noi on January 5 to implement tasks for 2017. He praised the banking sector’s outstanding contributions to the country’s positive outcomes across the fields in 2016, while speaking highly of its policy responses during the year. The monetary policy was regulated in a proactive and flexible fashion and inflation was taken under control, thereby enabling the regulation of fiscal policies and prices of essential commodities, PM Phuc said. Viet Nam’s foreign exchange reserves hit a record high of US$41 billion, he added. Concerning the tasks for 2017, the PM asked the SBV to well perform monetary and financial tools to curb inflation (below 4%) and maintain macroeconomic stability, as well as to make breakthroughs in handling weak banks and bad debts and contribute to realizing the economic growth target of 6.7% set by the National Assembly. The monetary policy needs to be regulated flexibly and prudently and combined more closely and effectively with the fiscal policy in order to support growth at a higher level and ensure macroeconomy be stabilized and inflation be under control, he stated. The SBV should also focus on removing difficulties, continue finalizing institutions and legal regulations aiming to effectively support the restructuring of credit institutions and handling bad debts, particularly concerning the procedures for dealing with security assets, mortgage assets, the rights of creditors and the responsibilities of borrowers, the leader said. He requested that…... [read more]

The government leader made the request at a conference held by the State Bank of Viet Nam (SBV) in Ha Noi on January 5 to deploy its tasks for 2017. He praised the banking sector’s outstanding contributions to the country’s positive outcomes across the fields in 2016, with the nation’s foreign exchange reserves hitting a record high of US$41 billion. Speaking highly of the SBV’s policy responses in 2016, PM Phuc asked the body to competently utilise monetary and financial tools in 2017 to keep inflation below 4% and maintain macroeconomic stability; produce breakthroughs in handling weak banks and bad debts; and contribute to fulfilling the economic growth target of 6.7% set by the National Assembly. The monetary policy needs to be regulated in a flexible and prudent fashion and combined more closely with fiscal policy in order to support growth at a higher level and ensure macroeconomic stability and inflation control, he said. The leader urged the SBV to continue maintaining the stability of the domestic foreign currency and gold market, increasing foreign exchange reserves, stabilising the Vietnamese currency, and enhancing its proactivity in forecasting the situation to devise preventive measures in policy regulation. The body was also requested to focus on removing difficulties and finalising institutions and legal regulations aiming to effectively support the restructuring of credit institutions and the handling of bad debts, particularly concerning the procedures for dealing with security assets, mortgage assets, the rights of creditors and responsibilities of borrowers. PM Phuc urged the SBV…... [read more]

VietNamNet Bridge - Commercial banks said the 2015 Civil Code, to take effect on January 1, 2017, stipulates that if asset holders refuse to hand over their assets, which act as collateral for loans, banks will only have the right to sue for assets. Article No 301 of the 2015 Civil Code means that the government’s Decree No 163 on secured transactions will no longer be valid. As such, credit institutions will not be able to seize collateral used to mortgage loans in case borrowers cannot pay debts on schedule. “We still don’t know what we need to do to collect debts from 2017, which is the most powerful instrument that helps us recover debts, and now it no longer exists,” said Thieu Anh Duong, CEO of Techcombank’s asset management company. Bankers said Decree 163 helps them collect debts. They reportedly have settled 55 percent of bad debts, but there is still a big amount of existing bad debt that needs to be recovered. According to Nguyen Kim Anh, Deputy Governor of the State Bank, there are many barriers that hinder the banks’ process of debt collection. Commercial banks said the 2015 Civil Code, to take effect on January 1, 2017, stipulates that if asset holders refuse to hand over their assets, which act as collateral for loans, banks will only have the right to sue for assets. About 45 percent of bad debts have been sold to the Vietnam Asset Management Company (VAMC), a 100 percent state owned company,…... [read more]

Banks keen to sell bad mortgaged assets to VAMC Thanh Thuong By Thanh Thuong - The Saigon Times Daily HCMC – Banks want to sell mortgaged assets that have deteriorated to Vietnam Asset Management Company (VAMC), saying they can handle the not-so-bad ones themselves, heard a conference on a draft circular regulating VAMC operations The circular only contains provisions on trading of secured debt, and does not mention unsecured debt, whereas most lenders are having trouble dealing with the latter, said a representative of Viet A Bank. Sharing his experience of debt settlement, a representative of Kien Long Bank said he faced the biggest challenge when mortgaged assets deteriorated and debtors moved away. However, the circular does not mention how to deal with such cases. “If mortgaged assets were good, banks would have sold them out already,” he told the conference held by the Vietnam Banks Association in HCMC last Thursday. VAMC is set up to buy the assets mortgaged for the loans that have turned irrecoverable, but this company will eventually authorize banks to handle such assets. A representative of Orient Commercial Bank wondered if the authorized banks could freely choose between negotiating with clients to liquidate such assets and putting them up for auction. He also asked who would cover the costs of debt recovery. “Who will watch over mortgaged assets? In case VAMC failed to handle the mortgaged assets and had to return them to banks, which party would be responsible if the assets had deteriorated?” he…... [read more]

VAMC says to focus on buying debts at book value Hong Phuc By Hong Phuc - The Saigon Times Daily HCMC – Vietnam Asset Management Company (VAMC) will initially focus on buying debts at book value, said Dang Thanh Binh, deputy governor of the State Bank of Vietnam (SBV), recently appointed as chairman of the board of members of VAMC. When VAMC has gained some experience and the situation gets better, the company will consider buying debts at market value. There needs to be an independent appraisal unit then to ensure transparency, he told the Daily ahead of the company’s inauguration scheduled for this Friday. Currently, VAMC’s ability is still limited and thus it cannot purchase all bad debts at once. The company has to carefully consider how much it should purchase and who it should buy from. VAMC cannot buy bad debts with problems in the process of loan application, collateral appraisal and use of loans, Binh stressed. “VAMC doesn’t operate for profit, but it doesn’t mean loss is accepted. The company must try to minimize losses and have revenue exceeding expenditure,” he stated. In the process of bad debt settlement, debt recovery ability greatly depends on mortgaged assets. “Thus, we will initially purchase secured debts only. Later, when VAMC’s capacity improves, we will consider buying unsecured debts,” he said. Before coming to purchase decision, VAMC will carefully examine whether the values of mortgaged assets correspond to debt values. Assets mortgaged for the debts bought by VAMC will be…... [read more]

City lenders record 16.5% profit decline Thien Binh By Thien Binh - The Saigon Times Daily HCMC – Credit institutions in HCMC earned a total profit of some VND4.76 trillion in the first six months, down 16.5% year-on-year, with bad debt a major reason for this decline, said the HCMC branch of the State Bank of Vietnam (SBV). A rising bad debt ratio forced banks to increase their risk provisions, leading to a fall in their profits. Risk provisions made by 14 HCMC-based banks totaled over VND8 trillion in the first five months of the year. In addition, banks had to cut lending rates to support their clients during the tough times, resulting in a smaller gap between deposit and lending rates. Profits from credit operations made up 88.3% of their total profits in the first half of the year, versus 90.2% in the same period last year. Due to economic uncertainties, businesses are performing poorly, struggling with surging inventories and dwindling purchasing power. Therefore, their ability to repay bank loans is limited, affecting revenue of banks, said SBV’s HCMC branch. As of end-June, bad debts at credit institutions in HCMC had totaled more than VND52.3 trillion, accounting for 5.85% of total outstanding loans, up 11% against end-2012. Debts classified into group five, or potentially irrecoverable debts, had amounted to over VND35 trillion, standing at 67.1% of total bad debts. In June, lenders reduced the value of debts in group five by VND892 billion. Assets mortgaged for the debts that…... [read more]

HÀ NỘI - Lack of effective policies hinders the development of the animal husbandry industry in Việt Nam, experts said. Over the past few years, a lot of preferential policies have been issued by the Government to encourage investors to pour money into agriculture. But some ot these policies, including the credit policy, have not improved efficiency. Tống Xuân Chinh, deputy head of the Department of Livestock Production under the Ministry of Agriculture and Rural Development (MARD), said that despite Government incentives providing loans for large scale farms, agencies faced a lot of difficulties in implementation. Decree No 55/2015/NĐ-CP, prescribing credit policies for agriculture and rural development, was considered a breakthough for restructuring agriculture and the economy. Under the decree which took effect on July 25 last year, credit institutions may consider the provision of loans to customers with or without asset mortgages. The decree allows credit institutions to raise the level of lending without collaterals by a factor of 1.5-2 times higher than before. An individual, business household, co-operatives or farm owners can take loans ranging from VNĐ50 million (US$2,240) to VNĐ3 billion ($134,520), depending on location and production. Farmers' demand for accessing loans to develop production was high, but the number of households receiving loans with interest rate of less than 11 per cent per year remains low, Chinh said. Although borrowers without collaterals can seek credit, they must submit their land use rights certificates or written certifications from commune-level People's Committees to lenders, documenting that they have…... [read more]

EVN works to ensure electricity for dry season Electricity of Vietnam (EVN) has prepared a number of measures to ensure electricity for the dry season, especially in the north, as heat is raging through. According to the group, the total installed capacity of the national power system is 38,300 MW, while the maximum load capacity is close to 26,600 MW. This means the system has around 20-30 percent of standby electricity to meet the anticipated surging demand. The power consumption in June is estimated at 16.2 billion kWh. However, as of May 9, the total amount of water in hydropower reservoirs could generate only 4.76 billion kWh of electricity, a shortfall from the normal rising water level of 9.75 billion kWh. The low water level in reservoirs of central and southern regions could generate a mere 2.21 billion kWh, or 86 percent of the level of the previous year's same period. EVN Deputy General Director Ngo Son Hai attributed the situation to the effects of El Nino, noting that most of the reservoirs contain only 80 percent of their designed capacity. Given this, EVN plans to increase the load capacity by 11 percent as approved by the Ministry of Industry and Trade (MoIT) and possibly even higher at 13-14 percent, he said. He raised the fact that in the first four months of 2016, the national power system generated over 56 billion kWh, a year-on-year increase of 13.91 percent. The EVN had to take full use of gas turbines and…... [read more]

HA NOI (Biz Hub) - Credit for State-owned enterprises (SOEs) currently accounts for roughly 15-17 per cent of total outstanding loans, deputy governor of the State Bank of Viet Nam (SBV) Nguyen Thi Hong said. Previously, credit for SOEs was relatively high, but now, credit for private enterprises has increased significantly, Hong said, adding that the central bank has always targeted credit for production and business operations, especially in the Government's prioritised industries such as agricultural and rural development, exports, support industries, small- and medium-sized firms and high-tech enterprises. However, she admitted that the capital market is under development to help enterprises with their long-term capital mobilisation requirements as the market was unbalanced due to the dependence on bank credit. Hong said the Government was very interested in the development of the financial market, including the monetary market, to create numerous channels to generate capital for enterprises. Deputy Prime Minister Vuong Dinh Hue recently also instructed the SBV and relevant ministries to develop the financial market to a healthy level and diversify enterprises' capital mobilisation channels, she said. Hong made the move as representatives from the private sector at a recent forum to support the sector said it was facing many difficulties, where the greatest challenge was access to capital. According to the representatives, while the private sector needs capital from many investors and numerous capital mobilisation channels, Viet Nam's financial market is unbalanced as most of the capital for enterprises comes from commercial banks. The capital source, with typically…... [read more]

VietNamNet Bridge - VCB Securities believes that the bad-debt ratio of the national economy may be as high as 11.02 percent. The State Bank (SBV) reported that by the end of November 2015, the NPL ratio of the banking system had fallen to 2.72 percent from 3.25 percent reported earlier last year. The NPL reduction came as commercial banks accelerated the provisioning against risks and pushed up the sale of bad debt to the Vietnam Asset Management Company (VAMC). The total NPL in commercial banks’ balance sheets was reportedly at VND135.872 trillion by the end of September 2015. However, VCBS has estimated that the bad-debt ratio might have reached 11.02 percent ,which includes reported non-performing loans (NPL), bad debt kept at VAMC, and debt which is likely to turn into bad debt after Decision No 780 on debt classification expired on April 1, 2015. Under Circular 02 which was applied after the decision was no longer valid, commercial banks will have to use information from the Credit Information Center (CIC) when classifying debts. The application of the circular with stricter international standards is believed to lead to higher bad debts. Under Circular 02 which was applied after the decision was no longer valid, commercial banks will have to use information from the Credit Information Center (CIC) when classifying debts. Meanwhile, VAMC, the biggest instrument in SBV’s hands used to restructure bad debts, has been given more power as its chartered capital has been raised to VND2 trillion, and SBV’s Governor…... [read more]




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