Vietnam makes progress cleaning up banking segment  The Vietnam government has made meaningful progress in cleaning up the banking segment after an out of control lending spree led to a crippling surge in bad debts back in 2012. Bank non-performing bad debts, which stood at 17% at the time, have now been reduced by roughly 5% to 12% with the bulk of them transferred to the Vietnam Asset Management Company (VAMC). The VAMC is a governmental agency specifically set up in 2013 to deal with the bad debt situation. In substance, the bad debts were transferred off the banking segments books and consolidated in the VAMC. As of August, the banking system non-performing loans stood at a much healthier 2.7% excluding the receivable from the VAMC, according to an announcement by the World Bank. VAMC, which lacks the financial capacity to deal with the bad debts will most likely receive support from the International Monetary Fund to address the remaining debt in the country’s banking system that it is unable to sell at fire-sale prices. Nguyen Quoc Hung, chair of the VAMC has announced that the agency has received offers from about 10 banks to sell as much as US$747 million (VND17 trillion) of bad loans so far this year. Among the interested banks are the IFC, Standard Chartered Bank, Jadara Capital, Seven Seas Holding, Blackriver Asset Management, GIC, Yamaichi Securities, VinaCapital, and VIC. Dr Le Xuan Nghia, director of the Business Development Institute, told Dau Tu newspaper recently that many foreign investors are interested in purchasing bad debts consolidated in VAMC. However, the collateral for the bad debts consists of property and the procedures for transferring land use rights and ownership of assets attached to a land are tortuous and time-consuming. Consequently, the sales of the bad debts have been greatly slowed. Though the Government continues to make progress, that process has been bogged down by the complicated legal questions involved. The sales to offload the bad debt is good news, said Trinh Nguyen, a senior economist at Natixis Asia Ltd. in Hong Kong. We really have to wait and see what the amount of cash received ends up being. The VAMC has about US$8.8 billion (VND200 trillion) of remaining unsolved bad debt, Saigon Times recently reported, citing the National Assembly’s Hien. Meanwhile the World Bank said in a report earlier this year that progress is being made by the Government in consolidating the banking segment. However, the Government’s target of reducing the total number of commercial banks in the country to 15 by the end of 2017 from the current 34 remains an immense challenge, the report said. International Monetary Fund Managing Director Christine Lagarde said in an interview that the Government’s actions have served to make the banking system stronger, better and more capitalized. This results in bank assets that are less stressed so that lenders can help stimulate broad based economic recovery throughout the country, he concluded. VOV