The Asian Development Bank is planning to acquire a troubled commercial bank and may introduce partners who are capable of helping Vietnam to clear its toxic debts, Prime Minister Nguyen Xuan Phuc said Friday at the Vietnam Development Forum.
Overhanging bad debts have been a burden on Vietnam’s economic growth since 2012 when total toxic debts, mostly in the real estate sector, reached VND280 trillion ($12.5 billion), equivalent to 11 percent of gross domestic product,
Last year, in an attempt to consolidate the country's fragmented banking sector, the State Bank of Vietnam took over troubled lenders Global Petro Bank, Vietnam Construction Bank and Ocean Commercial Bank.
The central bank decided to nationalize these banks because they had failed to restructure and showed serious risks and weak management.
The buy-out of these troubled banks aimed to help the State Bank of Vietnam become fully proactive in reforming them, ensuring safety and stability in the banking system and helping to maintain political security and social order, the central bank said in a statement.
The Vietnamese government started tackling non-performing loans in the banking system in 2013 when it officially set up bad-debt bank Vietnam Asset Management Corp., better known as the VAMC.
As of the end of August this year, the banking system had reportedly tackled VND548 trillion ($24.1 billion) worth of bad debts, said the central bank, of which almost 42.8 percent was housed at the central bank-run VAMC.