Forced sale of NPLs to AMC will push through

Vietnam will compel banks to sell bad debt to new Asset Management Company.

Vietnam said forcing the sale of Non-Performing Loans to an AMC will clean up some US$5 billion in bad debts. Lenders with bad debt ratios of 3% and above will be required to comply, said the State Bank of Vietnam, the central bank.

The AMC will be established this month, according to the National Financial and Monetary Policy Advisory Council.

The bad-debt ratio at Vietnamese banks dropped to 6% of total outstanding loans as of Feb. 28, from some 8% last year. Credit grew 2.1% in the first four months of the year after a 9% pace in 2012, which the World Bank described as anemic.

The AMC will help businesses have greater access to bank lending, the government believes.