Vietnamese banks step up bad loan disposal via auction

Agribank is planning to hold 12 auctions in September alone.

Vietnamese banks are taking the bull by the horns as they put up their nonperforming loans and collateral of default borrowers for sale via auction in an effort to speed up the resolution of the banking sector’s bad debt burden.

Also read: Vietnam steps up efforts to boost weakened banking sector

Agribank Management Company has announced that it will hold 12 auctions in September alone to sell its accumulated bad debts and collateral for a starting price of $20.25m (VND470b).

To recover its debt, VietinBank will also sell the debt belonging to Sông Đáy-Hồng Hà Oil and Gas Joint Stock Company. As of end-August, the debt has been valued at $2.85m (VND66.18b), including both principal and interest rates.

VietinBank has also unveiled plans to sell inventory worth nearly $4.78m (VND111b) of NEM Trading Joint Stock Company.

Similarly, Sacombank is preparing to hold an auction on September 27 to sell 11 properties related to non-performing loans and collateral of its borrowers at around $431m (VND10t).

The Vietnam Asset Management Company (VAMC) has also been putting up its bad debt for auction. The company will auction bad debts belonging to Đồng Thiên Phú Group Joint Stock Company that it bought from Agribank.

Also read: Can the VAMC single-handedly halt Vietnam's bad loan woes?

The VAMC also plans to auction collateral from Golden City Limited Company which it bought for VND76.3b, giving it the rights to 7,851 sq.m of land in HCM City’s District 9.

Banks handled $5.96b (VND138.29t) of bad debt following Resolution 42, according to central bank data contributing to reducing the bad debt ratio in the entire banking system from 2.46% in 2016 to 2.09% as of end-June.

“We estimate total NPLs would have declined to 7.9% by the end of 2017 from 8.6% in Sep’17, which we expect will decrease further to 6.1% by end-2018,” Maybank Kim Eng said in an earlier report.