From end of 2017 to now, the banks have accelerated handling of bad debts through putting up the mortgaged assets for auction to speed up the settlement of bad debts; accordingly, they collected thousands of billion back.
For instance, Vietnam Bank for Agriculture and Rural Development and Saigon Thuong Tin Commercial Bank (Sacombank) have collected VND8 trillion ($343.6 million) and VND9 trillion ($386.5 million) from auctioning the mortgaged assets.
Sacombank has also offered the Phong Phu industrial park project in Binh Chanh District at a starting price of more than VND7.6 trillion; the high-rise building and sport area in BInh Tri Dong residential quarter and half of the land No.122 in Binh Tri Dong B in Binh Tan District at starting price of VND6,698 billion; residential blocks in Long Binh ward in district 9 at VND1,815 billion; residential block in Binh Thuy ward in the Mekong delta City of Can Tho at VND4,565 billion or the land at 61-63 A on Nam Ky Khoi Nghia Street in HCMC’s District 1 at the price of VND811 billion.
Similarly, Agribank and Agribank AMC have organized auctions of the land No.132 Nguyen Thai Hoc in Hanoi and assets at the starting price of VND257.4 billion; Viettinbank sold NEM company at 156 Ba Trieu Street in Hanoi with a total debt value of roughly VND111 billion.
Vietnam Asset Management Company (VAMC) has announced to take back VND310,517 billion by June 30, 2018 or 40 percent of its bad debts. Additionally, VAMC and credit institutions also collected nearly 100,000 billion ($4.3 billion).
In 2017, thanks to the decree No. 42/2017 approved by the National Assembly (NQ42) on the implementation of the settlement of bad debts of credit institutions in Vietnam , VAMC has taken back VND30,852 billion completing 140 percent its plan.
Last week, Bank for Investment and Development of Vietnam (BIDV) also announced a plan to put up for auction the assets of Thuan Thao Nam Saigon JSC and 95 individual clients with the starting price of VND845 billion and other assets.
Though the decree No. 42/2017 allowing credit institutions to may sequestrate the estate of the debtors and auction mortgaged to clear bad debts in case that debtors are uncooperative, the decree has not given full power to banks; accordingly, banks faced hiccups along its way. Many cases ended up in court.
The reality shows that handling bad debts by auctioning mortgaged assets is better. However, banks says they use their fund for risks to deal with bad debts. For instance, last year, BIDV’s profit before setting the resource was VND23,715 billion but it was VND8,800 billion after setting the fund and paying tax. This shows that BIDV spend VND15 trillion for the fund.
In spite of the central banks’ announcement of bad debt rate of over 2 percent by June 30, 2018, banks said the real rate is 6.6 percent - 6.7 percent. Consequently, economists said that putting up mortgaged assets for auction is needed while the decree will expire next three years while the auction market is hardly formed during this time.
Banking expert Can Van Luc said information of mortgaged assets must be transparent before putting up for auction to protect investors.