Vietnam 'debt bank' finds itself struggling for funds

By VnExpress   October 27, 2016 | 04:51 pm GMT+7
Vietnam 'debt bank' finds itself struggling for funds
Laborers work at a construction site of a residential apartment building in Hanoi on March 16, 2016. Photo by Reuters/Kham

The government has only recouped 15 percent of the bad debt it's bought from troubled banks.

The banking system had reportedly tackled VND548 trillion ($24.5 billion) worth of bad debt as of the end of August this year, said the central bank at a conference on Wednesday.

Almost 42.8 percent of that has been bought up by the Vietnam Asset Management Company (VAMC).

The VAMC was set up by the government back in 2013 to buy bad debt from troubled banks.

Since then, the VAMC has bought VND227.84 trillion ($10.2 billion) worth of non-performing loans from banks, said Nguyen Quoc Hung, chairman of the VAMC.

However, the VAMC has only recouped about 15 percent of the bad debt, mainly by selling properties originally put up as collateral for loans in the real estate sector, which accounts for 63.5 percent of the total non-performing loans.

The VAMC was initially expected to fix half of the non-performing loans in the banking system. However, progress has been slow due to insufficient operating capital, said Hung.

The central bank is aiming to cut toxic debt in the banking system to below 3 percent of total outstanding loans for this year.

At a recent parliamentary meeting, Deputy Governor of the State Bank of Vietnam Nguyen Thi Hong said bad debt as of August 31 was reported at 2.66 percent, below the warning limit.

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