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NEWS UPDATES Asean Affairs   17 September 2013  

Central bank eases debt hurdle

Many banks are hoping to offload their bad debts on the new asset management company after the central bank removed a major hurdle to selling their bad debts to the new asset management company, according to analysts.

The State Bank of Vietnam (SBV) recently set up the Vietnam Asset Management Company (VAMC) to buy banks bad debts, but there was scepticism about its effectiveness since the VAMC was only expected to buy debts backed by collateral.

But the central bank has done away with the requirement in a circular that took effect on September 15.

The SBV in fact issued two circulars taking effect yesterday, one containing regulations for VAMC's purchase of debts, and the other on refinancing against bonds the VAMC will issue for the debts.

According to analysts, the circulars are vital since they provide comprehensive guidelines for purchasing and handling distressed debts.

They also spell out the process of selling and buying the debt between VAMC and third partners.

All lenders whose non-performing loans are in excess of 3 per cent have to compulsorily sell the debts to the VAMC. Failure to do so will attract penal measures from the central bank.

The VAMC will buy the debts by issuing interest-free bonds worth their book value.

The banks can then get refinancing from the SBV against the bonds.

The circulars are expected to remove the bottleneck plaguing the economy and help banks clean up their balance sheets and strengthen financial capacity, enabling them to lend again to businesses, the analysts said.

Banking analyst Dr Nguyen Tri Hieu told Dau Tu newspaper that "the two circulars loosen several conditions for selling and buying bad debts."

But settlement of lenders' bad debts through the VAMC relies much on co-operation from the banks, he said.

Truong Thanh Duc, chairman of Basico Law Firm, said: "The old regulation requiring credit institutions to have collateral securing the bad debts forced them institutions to sell ‘good' debts to the VAMC.

"The new circular repeals this regulation, so it will enable the banks to sell their bad debts more easily."

But a deputy director of a commercial bank, who declined to be named, remained sceptical.

He said though several conditions for selling the debts have been loosened, it is still not easy for the banks to sell them or for the VAMC to buy them.

Hieu pointed out: "Many banks will hesitate to sell their debts to the VAMC because they are afraid their prestige will be affected."


SBV Governor Nguyen Van Binh said this year the VAMC would only be able to buy bad debts worth VND30 trillion (US$1.42 billion) against a target of VND70 trillion.

Hieu agreed with this, saying the number was achievable.

But the VAMC would only buy the debts this year and be able to sell or recover them next year.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






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