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Banks recover bad debts as collateral liquidation simplified

By Le Chi    September 21, 2018 | 12:20 am PT
Banks recover bad debts as collateral liquidation simplified
Saigon One Tower is one of the first properties auctioned to recover debts. Photo by VnExpress/Quynh Tran
Banks are selling hundreds of millions of US dollars worth of collaterals to recover debts.

The National Assembly’s Resolution 42/2017/QH14 on dealing with bad debts of credit institutions seems to have created a more efficient mechanism for disposing of collaterals to recover bad debts.

According to analysts, the most prominent feature of Resolution 42 is the favorable mechanism it has given rise to for handling collaterals.

It allows credit institutions to seize and sell assets at market prices through simplified legal procedures.

Sacombank is now offering a number of properties for sale, including four land plots worth hundreds of millions of US dollars.

The largest, the Phong Phu Industrial Park in Binh Chanh District, HCMC, has an auction reserve price of VND7.6 trillion ($327 million).

Located on Nguyen Van Linh Road with 134 hectares for factories and services, it has 50 years to run on its lease.

Another property, offered at VND6.7 trillion ($289 million), is a 530,000-square-meter land plot in Tan Binh District.

The third, a residential project measuring over 600,000 sq.m in the Mekong Delta city of Can Tho’s Binh Thuy District, is worth VND4.57 trillion ($197 million).

The last one is also a residential project with 164,950 sq.m in Long Binh Ward, District 9, HCMC, costing VND1.8 trillion ($77.54 million). Land clearance and compensation payment have been completed.

Besides, the lender is set to auction several other properties in HCMC valued from hundreds of thousands to several millions US dollars.

Agribank and Agribank Asset Management have also been auctioning more than 10 land plots worth a total of VND470 billion ($20.25 million) this month.

Also going under the hammer are a workshop and machinery of Vietnam Life Pro Joint Venture Company worth VND257.4 billion ($11 million).

BIDV is seeking to sell the assets of the Thuan Thao Nam Sai Gon Joint Stock Company and 95 related individuals, whose total outstanding loans as of the end of last year were nearly VND2.3 trillion ($99.1 million).

The loans were secured with the company's head office in District 1 and two land lots measuring 22 ha in Binh Chanh District, HCMC, which are worth about VND845 billion ($36.4 million).

VietinBank’s Thu Duc branch plans to auction collateral to recover a debt of VND6 billion ($259,000) from Gia Phu Real Estate.

Between 2012 and last June VND786 trillion ($33.7 billion) worth of bad debts have been recovered, according to the State Bank of Vietnam (SBV).

In the first six months of this year Vietnam’s credit institutions recovered VND58.8 trillion ($2.53 billion).

The SBV said that in the one year since the National Assembly passed Resolution 42 on June 21, 2017 they had recovered VND138 trillion ($5.94 billion).

The current bad debt rate at credit institutions is a little more than 2 percent, it said, but admitted the rate could be as high as 6.6 percent if their off-balance sheet debts, including those with the Vietnam Asset Management Company (VAMC), are included.

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