Home > Blog >

VAMC to Buy Non-Performing Loans - Vietnam Briefing News

Hanoi – The State Bank of Vietnam (SBV) has issued an instruction directing credit institutions to sell 75 percent of non-performing loans (NPLs) to national debt dealer Vietnam Asset Management Company (VAMC) by June 30, 2015. The rest of the loans are to be sold to VAMC by September 30 of the year. This move is to help banks meet the government mandated reduction of NPLs to below three percent of loans by the end of 2015.

VAMC, which came into operation on July 9, 2013, is a state-owned company with a mandate to purchase bad debts from the banking sector and restructure these loans. In exchange, banks are be provided with special bonds that can be temporarily placed with the State Bank of Vietnam for liquidity. VAMC is expected to speed up cleaning up bad debts while encouraging banks to lend more.

RELATED: Dezan Shira & Associates’ Global Services

The Vietnamese government has made a great many efforts to handle bad debts, one the most critical issues for the financial and banking sector in recent years. Thanks to VAMC, the ratio of NPLs in banking system has fell to 5.4 percent in 2014 from 17 percent in 2012. VAMC has bought NPLs worth about VND 96 trillion (US$4.57 billion) in 2014, and has got approval from SBV to purchase debts worth VND 80 trillion (US$3.76 billion) this year. It is compulsory for credit institutions to sell their NPLs this year, as soured loans among Vietnamese banks have led to this tightening of credit to boost weak consumer spending.

RELATED: An Introduction to Vietnam’s Import & Export Industries

According to the Vietnam General Statistic Office, Vietnam’s gross domestic product (GDP) rose 5.98 percent in 2014 from a year earlier, beating the government target of 5.8 percent and higher than 2013’s 5.42 percent rate. Inflation in 2014 was at its lowest level in the past ten years at 1.84 percent, helped by falling global oil prices. Credit growth rate was 13 percent in 2014. The Vietnamese government has set a target of 6.2 percent GDP growth rate, five percent inflation rate and 13 – 15 percent credit growth rate in 2015. As GDP growth and inflation rates appear on target, SBV has revealed that the banking sector has recorded 0.68 percent credit growth in the first two months of 2015.


About
Us

Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN. For further information, please email [email protected] or visit www.dezshira.com.

Stay up to date with the latest business and investment trends in Asia by subscribing to our complimentary update service featuring news, commentary and regulatory insight.

Import and Export: A Guide to Trade in Vietnam
In this issue of Vietnam Briefing Magazine, we provide you with a clear understanding of the current business trends related to trade in Vietnam, as well as explaining how to set up your trading business in the country. We also attempt to give perspective on what will be Vietnam’s place in the Association of Southeast Asian Nations (ASEAN) in 2015, and look at some of the country’s key import and export regulations.

Tax, Accounting, and Audit in Vietnam 2014-2015
The first edition of Tax, Accounting, and Audit in Vietnam, published in 2014, offers a comprehensive overview of the major taxes foreign investors are likely to encounter when establishing or operating a business in Vietnam, as well as other tax-relevant obligations. This concise, detailed, yet pragmatic guide is ideal for CFOs, compliance officers and heads of accounting who need to be able to navigate the complex tax and accounting landscape in Vietnam in order to effectively manage and strategically plan their Vietnam operations.

An Introduction to Doing Business in Vietnam 2014 (Second Edition)
An Introduction to Doing Business in Vietnam 2014 (Second Edition) provides readers with an overview of the fundamentals of investing and conducting business in Vietnam. Compiled by Dezan Shira & Associates, a specialist foreign direct investment practice, this guide explains the basics of company establishment, annual compliance, taxation, human resources, payroll, and social insurance