VAMC sets annual target for debt purchases

The paper quoted the State Bank of Vietnam's Chief Inspector Nguyen Huu Nghia as saying that the central bank outlines a NPL purchase and sale plan together with several measures to help VAMC reach the goal.

Nghia said the total NPLs that credit institutions want to sell to the VAMC climbed to VND30 trillion (US$1.42 billion). The number of NPLs is expected to increase after the issuance on June 1 of two circulars that provided classification of assets, the levels and methods of setting up of risk provisions, and the use of provisions against credit risks in banking activities of credit institutions and foreign banks' branches.

The two circulars contain detailed information on NPLs, and reveal that debts will increase.

Nghia, however, said the two circulars will also create a safe foundation for the credit institutions to better implement their risk administration work, and restructuring as well as settlement of NPLs.

"So far this year, the VAMC has bought more than 6.3 trillion worth of NPLs, thus increasing the total NPLs that the company has purchased to VND45 trillion. In addition, the banking sector itself has already settled NPLs worth about VND10 trillion," he said.

Recently, the central bank approved the volume of special bonds to be issued so the VAMC would be able to accelerate its purchase of NPLs in the coming time.

By the first quarter of this year many commercial banks announced that their potentially irrecoverable debts had increased strongly even though their NPLs ratio was under 3%.

For instance, Vietcombank's potentially irrecoverable debts had gone up by 10%, to VND3 trillion. Meanwhile, BIDV's irrecoverable debts had also been raised by 32% to VND5.56 trillion, and ACB's VND2.3 trillion.

In an attempt to increase the settling of NPLs, Nghia said one of the measures that the central bank will immediately apply is to ask the VAMC and credit institutions to jointly build debt purchase and sale plans each month.