US$474 million needed to buy Vietnamese banks' NPLs

Bad debt bank will issue special bonds.

Vietnam Asset Management Company will acquire some US$474 million of non-performing loans or NPLs over the next two months. It is tasked with cleaning up bad loans accumulated by Vietnamese banks.

Chief Executive Officer Nguyen Huu Thuy said banks will be able to use the bonds to secure funding from the State Bank of Vietnam, the central bank. He said VAMC can start buying the first batch of bad debt in the next two weeks.

“This will send a positive signal to the market and investors, so they can see how quickly we can move forward and how determined we are in resolving bad debt.”

The government intends to overhaul almost US$5 billion in bad debt at banks to help revive an economy that last year grew at the slowest pace since 2005.

Analysts said any concrete action or step by the VAMC, the country's "bad debt bank," will be welcomed by the market. The purchase of debt is a new step on this long road to resolving bad debt.