Nguyen Duc Thach Diem, general director of Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank), said that, in the first five months, the Bank had successfully auctioned 9.7 trillion dong. Thus, from then until the end of the year, Sacombank was sure to complete the target of dealing with 11 trillion dong of bad debt. Sacombank had actively recovered and dealt with bad debts, minimised unprofitable assets. The turnover of debt collection and settlement in 2019 alone reached 18.4 trillion dong, bringing the accumulated figure to 38.346 trillion dong. The outstanding assets decreased by 35.6 percent compared to 2016, currently accounted for only 13.8 percent of total assets.
Vo Tan Hoang Van, general director of Sai Gon Joint Stock Commercial Bank (SCB), said that the Bank still held more than 20 trillion dong of bonds of Vietnam Asset Management Company (VAMC), but had made more than 40 provisions. The reserve fund of SCB had reached over 11 trillion dong. The Bank was still making efforts to handle bad debts to revert to a provision after the restructuring process, and all bad debts could be finished. Currently, the process of dealing with bad debts had a mechanism of VAMC.
From the beginning of 2020 until then, the three banks, including Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV), Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Sacombank, had sold many real estate projects such as Kenton Node, The Era Town, properties attached to land in Binh Duong, Hung Yen. However, as a result of the Covid-19 pandemic, banks’ asset sales were still in trouble.
Answering the questions of shareholders about the reason for the delay in real estate development in Phong Phu Industrial Park, Nguyen Mien Tuan, vice Chair of Sacombank’s Board of directors, said that the process of implementing this real estate had existed, so the People’s Committee of Hochiminh City asked Sacombank to suspend sales promotion for review.
In previous years, banks continuously sold bad debts with real estate mortgaged assets to VAMC. Recently, they had kept promoting asset sales and bad debt recovery. The reason was that, after the five-year term of selling bad debts to VAMC, 2019 was the time for banks to finalise VAMC bonds for unresolved debts, despite risk provisions of 20 percent each year. Therefore, when bad debts were received, banks tried to liquidate their assets, including reducing prices in an auction to find buyers.
According to data released by Nguyen Van Du, deputy Chief of Banking Inspection and Supervision Department of Banking Inspection and Supervision Agency (the State Bank of Vietnam), estimated that by the end of December 2019, the bad debt ratio of the on-balance sheet of the whole system at 1.89%, achieving the goal of less than two percent at the beginning of the year. Accumulated from August 15, 2017, to the end of December 2019, the whole system handled 305.7 trillion dong of bad debts, which was determined under Resolution 42/2017/QH14 on piloting bad debt handling, excluding using risk provision and selling debt to VAMC through special bond issuance.
It was known that VAMC was building a Project on Establishing a Bad Debt Exchange. In the immediate future, it had agreed to set up an AMC Club (including VAMC, debt purchasing, and selling companies under the Bank). According to the plan, from 2020 to 2021, VAMC would officially operate the bad debt trading floor; promote the operation of the bad debt trading floor and the concentrated bad debt trading market, of which VAMC was the centre of the market.
According to Can Van Luc, a financial and banking expert, with the current chartered capital of 2 trillion dong, buying tens of trillion dong of bad debt at the market price as planned by VAMC was tough. Also, experts believed that, in order for the debt trading market to operate smoothly, the National Assembly should soon start solving legal problems related to taxes and the transfer of collaterals as real estate. Some investors, when buying assets of bad debts, could not carry out the procedure of transferring names due to a dispute.
For example, on the right to seize the collateral, even though Resolution 42 allowed the Bank to seize collaterals, in fact, without the consent of the debtor, the Bank could not seize it to handle. At the beginning of the implementation of Resolution 42, many debtors cooperated in handing over assets to banks. However, recently, when the police, the authorities, the courts slowed down, the debtors tended to slow down, even invited each other to pay the debt.
