VAMC’s debt purchases hard to sell off The Vietnam Asset Management Company (VAMC) has bought tens of trillions of dong worth of bad debts from commercial banks, but it has not made any considerable progress in selling the debts.   The State Bank of Vietnam has released Circular No 09 on rescheduling the debt payment and maintaining the debt classification mechanism, which has led analysts to believe that VAMC still has huge debts to buy. The chair of Eximbank, Le Hung Dung, said his bank would sell another VND1-1.5 trillion worth of bad debts to VAMC this year, following the sale of VND924 billion to VAMC in 2013. Eximbank is the second biggest debt seller to VAMC so far, while the first position belongs to SCB, which has sold VND6 trillion and plans to sell more in the time to come. Compared with banks with equal or higher total assets, Eximbank has the highest bad debt amount to be sold, analysts believe. Sacombank and Vietcombank sold VND1 trillion last year, while ACB sold VND423 billion in 2013 and recently sold another VND80 billion in the first quarter of 2014. Meanwhile, BIDV, which sold a record-high debt of VND1.4 trillion in 2013, plans to sell VND600 billion this year. Analysts believe that Eximbank may want to sell more debts because of its rapid bad debt increase, though its bad-debt ratio is still not high enough to require the bank to sell debts. The bad debt ratio of the bank had increased to 2.38 percent by the end of the first quarter from 1.93 percent late last year. However, according to VAMC, the amount of bad debts it bought in the first quarter was very low. It bought VND3.929 trillion from 10 credit institutions, which was much lower than the targeted level of VND10 trillion. As such, VAMC has bought VND42.829 trillion worth of bad debts with VND35.448 trillion worth of special bonds issued. Nguyen Quoc Hung, who has just taken office as chair of VAMC, said VAMC was trying to raise the total debt to be bought to VND70 trillion by the end of the year. However, Hung admitted that VAMC needs to think more about how to sell the bought bad debts instead of trying to buy bad debts. Analysts said that the VAMC’s debt settlement ability remains questionable because the unit still has not taken any considerable move to deal with the debts it has bought. Hung would only say that VAMC had finished the bad-debt classification. Regarding the plan for the immediate future, VAMC will sell debts worth VND1.4 trillion in a pilot program. There are four expected debt buyers and all of them would be domestic investors because VAMC still cannot sell debts to foreigners, as the legal framework for such sales has not been created yet. Hung also complained that, under current regulations, VAMC cannot sell big debts, and is limited to selling debts under VND10 billion, which, in effect, “clips its wings”. Source: VNN/NCDT