Permanent Deputy Chairman of VAMC's Member Council Nguyen Quoc HungPhoto tin247.com

Agribank is the first credit institution to have sold its bad debts to the Vietnam Asset Management Company (VAMC). It is expected to be followed by a host of other institutions. How will the VAMC solve the debt bought from credit institutions? Permanent Deputy Chairman of VAMC's Member Council Nguyen Quoc Hung has shared his opinion about this issue with local media.

Why did VAMC choose Agribank to be its first customer?

It was fate. It is not because I used to work for Agribank before going into the VAMC, but the bank, a credit institution with a wide network, big assets and bad debts, hopes to re-structure its bad debts and investment items as well. The VAMC has not forced Agribank to sell its bad debts, but Agribank took initiative to work with us. After one week, we had verified and classified tens of documents and then chosen 11 customers with 27 bad debts qualified for purchase.

Agribank has set up many branches throughout the country. Photo nguoiduatin.vn

Agribank's bad loans were worth more than VND2.5 trillion (US$119 million) but VAMC paid VND1.7 trillion by issuing bonds. Why are there differential figures?

Agribank is a State credit institution so it has to set up annual funds for provision worth VND800 billion ($38 million). The remainder was sold to VAMC.

After buying debts from credit institutions, how will VAMC solve them?

The VAMC has been focusing on buying bad debts from commercial banks. The company will improve its capacity to classify every kind of bad debts to help businesses restructure their debts.

In fact, the VAMC's purpose of purchasing bad debts is not for only selling. We want to co-ordinate with banks and businesses to classify and restructure debts effectively, helping businesses to push up development.

In comparison, the VAMC is seen as a "hospital of bad debt". After receiving patients, we will have to check and diagnose the diseases before prescribing a suitable medicine. Being a hospital, it will need talented doctors with support from advanced machines. So, to solve bad debts, the VAMC can not work efficiently alone; it requires support from many organisations.

It's not by chance that we made our bonds valid for five years. It means banks can free themselves of bad debt while we find the best way to solve them.

Are there any foreign customers interested in bad debts?

We have received many proposals and have presented the VAMC's operation model and guaranteed assets. A number of foreign customers have asked to buy bad debts from VAMC, but we have not yet signed, co-operated or sold debts to them.

We need to be cautious about this. Our final purpose is to support credit institutions and businesses. The VAMC is not a means to sell the assets of businesses and banks to foreign organisations for a knock-down price.

What would happen if the VAMC's bad loans were sold at a lower price than the book value?

VAMC is a non-profit company, therefore if an asset was sold at a price lower than its book value, the credit institutions needs to use its provisions. However, we will always discuss with the credit institutions before selling their assets to others. — VNS