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HA NOI (Biz Hub) — The Viet Nam Asset Management Company (VAMC) had bought VND38.9 trillion (US$1.85 billion) worth of bad debts at a cost of VND32.4 trillion ($1.54 billion) in the form of special bonds from 35 credit institutions by December 31, 2013.

There is one more bank that VAMC plans to buy bad debts this year. Nguyen Quoc Hung, VAMC's deputy chairman, said the quantity of bad debts they would buy was not high.

Banks face a deadline of June to clean up their balance sheets, after which new rules regarding non-performing loans (NPLs) come into force. The new rules are part of the country's banking reforms. Banks are reported to be rushing to offload their NPLs to VAMC and clean their balance sheets before the deadline.

Despite the new regulations on NPLs, Viet Nam's banking sector has not seen any regulatory improvement regarding transparency, loan classification and accounting standards.

VAMC, a wholly State-owned company with charter capital of VND500 billion ($23.7 million) and managed by the central bank, was established in late July last year to reduce the bad debts of the banking sector.

It started business in October last year and set a target of purchasing VND30-35 trillion ($1.42-1.66 billion) of bad debts by the end of 2013.

Apart from the debt business, the Ministry of Finance allows VAMC to hold deposits at state-owned banks and make investments (hold stakes) in other companies.

Other terms regulating VAMC's business are presented in Circular No 209/2013/TT-BTC, which comes into effect from February 15 this year. — VNS