SBV restructures huge bad debts

HA NOI (Homeid)— Non-performing loans (NPLs) of commercial banks were estimated at VND137.1 trillion (US$6.53 billion) by the end of April, accounting for 4.67 per cent of total loans, according to data from the State Bank of Viet Nam (SBV).

 

 

 

A Vietinbank employee processes a loan for a customer. Non-performing loans among banks as of April reached US$6.53 billion. — VNA/VNS Photo Tran Viet

 

The NPLs in late 2012 and 2011 were respectively 4.08 per cent and 3.07 per cent of total loans.

However, SBV said if debts had not been dealt with and restructured in accordance with Decision 780/QD-NHNN on classification of rescheduled loans, NPLs may have reached VND362.8 trillion ($17.2 billion), or 11.5 per cent of total loans.

SBV said that by the end of April this year, a total VND284.4 trillion debts had been restructured in accordance with the decision.

About VND76.7 trillion of bad debts were tackled through loan loss provisions last year and the January-April period this year. Provisions for loan losses increased to VND73.6 trillion ($3.5 billion) as of April 30, up 14.6 per cent from last December.

SBV Governor Nguyen Van Binh expected Viet Nam Asset Management Company (VAMC), which was due to officially go into operation next month, would help resolve roughly VND40-70 trillion of NPLs this year.

According to a newly issued decree on NPLs, banks with NPL ratios of 3 per cent or more would have to sell the loans to the VAMC.

Banks that failed to comply with the regulation would be inspected by the central bank or they would have to hire an auditing company or independent evaluation firm to assess the quality and value of their assets, equity and charter capital at their own expense.

Based on the auditing results, banks would have to sell their NPLs to the VAMC to ensure NPL ratios stayed at a safe level, while also restructuring under plans approved by the central bank, the decree stated.

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