Banks find luxury cars and villas difficult to liquidate

Tuesday, Jun 06, 2023 17:05

A cement factory in the northern province of Lang Son is being auctioned off by BIDV. — VGP Photo

Banks have been reportedly finding luxury cars and villas difficult to liquidate, even after significantly reducing their prices in an effort to attract buyers, according to industry insiders.

The Bank for Investment and Development of Vietnam (BIDV) has recently announced the auction of two high-end cars. The 2012 Audi A8L has a starting auction price of VND940 million, while the 2015 Land Rover Range starts from VND3 billion, both markedly lower price points (VND500-800 million lower) in comparison to similar used cars in the market.

These prices do not, however, include costs associated with ownership transfer, registration fees, and other potential expenses that may arise from the purchases.

The Vietnam Bank for Agriculture and Rural Development (Agribank) and the Vietnam International Bank (VIB) are also auctioning luxury cars, including Porsche, BMW, and Mercedes-Benz models. Agribank HCM City is auctioning a 2018 Porsche Panamera with a starting price of VND3.35 billion, for the seventh time. The bank's price has dropped by as much as VND2.2 billion from the initial asking price.

Meanwhile, BIDV is trying to sell a villa as collateral for the debt owed by one of its borrowers. The villa is situated in Hoai Duc District in Ha Noi with a total land area of 310 square metres and a floor area of 436.1 square metres. BIDV has dropped the price to VND22 billion, lower than its previous asking price of VND26.6 billion in August last year.

Apart from luxury cars and villas, banks are publicly auctioning various assets, such as machinery and equipment, fishing boats, production workshops, stocks and land use rights.

Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) has held no fewer than 14 auctions for an unfinished industrial complex located in northern Hai Duong Province. The bank's asking price for the complex, which includes production workshops, operational buildings, material storage warehouses, finished product storage facilities, and all machinery and equipment, as well as the land lease, has dropped by nearly VND50 billion since last listing in May last year.

According to economists and industry experts, difficulties in the liquidation of collateral assets held by the banks are mainly due to the current economic downturn, which significantly reduces demand for luxury assets.

In addition, legal quagmires, which typically further complicate such transactions, remain a major obstacle for potential buyers.

Dr Can Van Luc, Chief Economist at BIDV, said there should be amendments to the draft Law on Credit Institutions to address such issues with an aim to provide clearer criteria for determining the value for bad debts and associated collateral assets.

According to recent data released by the State Bank of Vietnam (SBV), the non-performing loan ratio in the domestic banking system stood at 2.88 per cent as of the end of March 2023 with the gross non-performing loan ratio currently standing at around 5 per cent, up from 4.5 per cent at the end of 2022. — VNS

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